The corn market closed lower on profit taking and technical selling after the corn market moved higher the last 2 days. Traders seemed to realize that just because the EU will allow 3 kinds of GMO grains, it will not increase corn exports from the US to Europe because no elevator separates the many different varieties of GMO corn grown here in the US. Europe could increase the import of corn by products like distillers dried grain and corn gluten. The corn market also was supported by further liquidation of the wheat/corn spreads. Volume was light/moderate with not a lot activity after the middle of the session. Funds sold 2,000+ contracts by the end of the day. Farmer sales are still light for this time of the year as many farmers have already sold the grain and are storing a lot on the farm. Higher outside markets, specifically crude oil helped corn rally back later in the session and prevented corn from really selling off.
eCBOT market was lower overnight as the corn market continues to see some harvest pressure as many farmers are now turning to corn as they finish with bean harvest and getting wheat planted. There was very little news out overnight. So. Korea bot 45,000 tones of non-GMO corn from the US. Philippines announced it will hold a tender for 200,000 tones of corn before the end of the year for January delivery. Wet weather in western Midwest is slowing harvest, but as Monday's progress showed, it really isn't an issue yet. Corn looks to be in a range trade as many traders think the USDA was understating the US corn crop in the October report and will sell rally's. We saw some of that yesterday when December hit technical resistance at $3.60 area. Corn will be well supported as exports remains very strong and we keep hearing about lower production out of China. We look for corn to open lower this morning, but it is a follower, so watch the beans and maybe wheat for direction.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 357^4 -3^0 360^6 357^0
ZCH8 374^0 -3^2 377^4 374^0
ZCK8 384^6 -2^6 388^2 384^6
ZCN8 394^4 -2^2 396^6 394^0
Early Opening Calls: 2 to 3c lower
Top News
**USDA reports private sale of 105,664 mt of US corn to Japan for 07/08
-- Export News: Philippines tendering for 200,000 mt. Corn by years end for Jan. delivery
-- 45,000 mt of Opt origin Non-GMO corn bought by S Korea
-- Argentine corn planting progress estimated at 33.2% complete, which is an increase of +8.2% from last week, acc. to Ag Ministry
-- ONIGC: French corn production revised +3% higher to 13.06 mil tons, corn carryover +18.75% to 2.28 mil tons
-- Aflatoxin confirmed in northeast Iowa and Nebraska.
-- October cattle on feed report will be released on Friday, early sample of analysts see On-Feed at 94-97% of year ago numbers, while Marketings during Sept were in a range of 94-98 & placement of animals on feedlots ranged at 102-112% of year ago figures.
-- Brazilian government investment bank (BNDES) expected to expand ethanol investment by nearly $550 million - should result in 100 new production facilities within 3 years, acc. to gov sources
-- Canadian BioEnergy's Edmonton plant will use 5% of the total rapeseed produced in the country, acc. to the statement
-- New biodiesel refinery planned for Edmonton, Alberta, Canada - will utilize rapeseed as a feedstock and production pegged at 60 mil gallons, acc. to Canadian BioEnergy statement
-- Dalian Corn futures lower in overnight trade.
-- eCBOT Vol: 97,673; Pit Vol.: 24,867; Open Interest change: +1,104
-- Weather: Normal to Below Temps. Normal to below Precip. Corn Belt will see showers and scattered thunderstorms today into Friday.
-- Outside markets. Energy: crude & products lower ; Gold & Silver: both higher; US $ lower vs. Euro, slightly higher vs. Yen.
Cash Markets
--CIF Corn steady off 1 . Oct. +59 to +??, Nov. +64 to +66, Dec. +64 to +66, Jan. +54 to +55, Feb. +53 to +55, Mar. +50 to +54, A/M +40 to +43
TREND:
CZ up to first major resistance at 3.60 to 3.65. It is time to be less positive to prices at these levels. May take a few days of sideways trade before this market can test higher levels? Delays in harvest allowing basis levels to take on less of a negative feel?
Wheat is a dead duck. Do not look for much rally potential here. Look for WZ to test 7.50 quickly. Pricing will make this a choppy down side trade with small selling opportunities.
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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