The corn market closed higher on Wednesday on the back of the rally in the soy complex and short covering in front of the USDA report that will be released tomorrow morning before the opening. The December contract closed almost 5 higher on a 4 cent trading range and very light volume with funds buying 5,000+ contracts by the end of the day. Harvest weather continues to be very good and cash traders report very little farmer selling as much of the corn is going to fill old contracts and a lot of corn is being stored on the farm. This harvest pressure is helping to keep corn prices from really rallying and we actually see different traders willing to sell rally's in corn. We continue to hear talk of the USDA slashing the estimated 2007 harvested bean acres. Traders also said we are seeing specs and funds squaring some positions in front of the USDA report tomorrow, but for the most part, corn is going to grind around until we get the USDA report. Technicals remain weak for the corn market.
eCBOT market was higher overnight as traders continue to square positions in front of the USDA report tomorrow morning and a stronger wheat market. Weekly export sales are also delayed until tomorrow morning because of the holiday on Monday. Very little new news out about corn right now and it is following the other grain markets when looking for direction. A higher corn market was also helped overnight by other commodity markets trading higher (gold, crude) and a weaker US dollar. The market seems to be looking for a very bearish number tomorrow in either a change in estimated yield or an increase in estimated harvested acres. I think the market will open higher and try to rally, but it will me with active selling on traders trying to position themselves for a negative number tomorrow. We will also see some traders squaring positions to reduce their exposure to a surprise number. The surprise tomorrow would be the USDA leaving much of its September numbers the same, but do you really think the corn market is going to trade higher even with a bullish number? November options expire tomorrow, so that could be a cheap way to try and play the USDA report. We look for a quiet day today unless the beans push a the market higher and corn follows.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 349^4 2^2 349^6 346^2
ZCH8 366^0 1^6 366^0 363^0
ZCK8 376^0 1^6 376^0 373^2
ZCN8 385^0 1^6 385^0 381^6
Early Opening Calls: 2 to 3c higher
Top News
-- USDA Weekly Export Sales data release delayed until Friday due to Columbus Holiday on Monday
-- 100,000 mt of US Corn bought by Israeli feed group for Dec/Jan delivery.
-- Friday USDA releases latest monthly crop supply/demand & world ag production figures. Analysts see corn production at 13.46 mln bu and a yield of 157.7 bu/ac. Carryout is estimated to be 1.959 bln bu.
-- Dalian Corn futures lower, active May contract off 6 Yuan/mt on 500,000+ contracts traded
-- eCBOT Vol: 61,534; Pit Vol.: 61,534; Open Interest change: +327
-- Weather: Above Normal Temps. Normal to Above Precip. Corn Belt will be dry into Saturday.
-- Outside markets. Energy: crude up before storage report, products sharply higher ; Gold $6.90 higher & Silver: 16c higher; US $ off against Euro, slightly higher vs. Yen.
Cash Markets
--CIF Corn up 1 to 3 . Oct. +59 to +61, Nov. +63 to +66, Dec. +64 to +66, Jan. +51 to +54 J/F/M +51 to +54
TREND:
Wheat has stalled on the break but still see small rallies in Chi as selling opportunities. Do bear spreads in Chi and come back to KC/Chi on small corrections
Corn still has a lot of harvest to come---rallies will have problems---high today was 13 cents of the lows. Could be enough?
If you have any questions, or if you would like to discuss specific trade recommendations on any markets, contact me directly.
Jim Riley
Linn Group
877-787-6278
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