The corn market rallied on Thursday on the back of a weaker dollar, a slow down in the weekly harvest and strong export sales. The December contract closed right at its high, up over 9 cents on the day. The weekly export sales were once again very strong and surprised the market once again even when traders were looking for a big weekly number. The dollar was weaker again yesterday, reaching 30 year lows against a basket of foreign currencies, which should keep exports strong for US grains. For many of the grains, the US market is the only place, and the weaker US dollar makes it just that more attractive. Traders also pointed to higher crude prices as helping to support corn prices. There were some stories out that even with the lower ethanol output next year, refiners will be blending a bigger percentage of ethanol with regular gas as an additive. Volume was moderate/light and funds bought 7,000+ contracts by the end of the day. USDA chief economist released his estimate for planted acres for 2008 which showed a reduction in almost 7 mil corn acres which was supportive to the corn market. Informa will release their estimate later this morning, but it should have minimal impact now that the gov't released their estimate.
eCBOT market continued the rally from yesterday closing up 2 cents right up against the highs. Volume was light. Wheat led the grain markets higher overnight as it seems you can't keep a good wheat market down. Rumor out of Russia was they were going to raise their export duty from 10% to 30% to help curb exports. Outside markets also helped support the corn market as gold and crude are higher overnight and the dollar is weaker again. The corn market still seems to be in a range trade and will be a follower of the other grain markets. Wheat surprised some traders overnight with the big question this morning is why was wheat up almost 15 cents overnight. Talking to some traders this morning, they pointed to the light volume overnight and lack of sellers as part of the reason wheat rallied as much as it did. Exporters announced sales of 138,176 tones of US corn to Japan for 07/08 delivery. US weather will help support corn this market as rains raced across the Midwest yesterday putting combines in the barns for a couple of days. There was some very violent weather that produced high winds and hail which could make harvest a little more difficult. The weather in So. America remains ok for plantings as they continue to receive adequate moisture for seeding and for the crops already in the ground. The corn market should open unchanged/slightly higher, but it will look for direction from the other grain markets.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 369^2 2^0 369^4 366^2
ZCH8 385^0 1^4 385^6 382^6
ZCK8 396^0 2^2 396^0 392^2
ZCN8 404^0 1^6 404^0 400^4
Early Opening Calls: 1-2 higher
Top News
-- USDA's Keith Collins believes US corn acreage will decline in the coming year to 87 million, cotton to 10 million. USDA's Keith Collins also pegs US wheat plantings at 64 million acres, soybeans at 70 million - both increases from the previous year
-- Planting estimates for corn, soybeans & wheat expected to be released by Informa Friday morning.
-- 352,000 mt of corn import licenses awarded by European Union in latest week, total imports authorized during the season have risen to 4.26 mln mt up from 1.3 mln mt seen in same period year ago
-- French gov't grain office pegs falling grain exports to Spain for 07/08 at 3.3 mln mt, down from the 4.9 mln mt in 06/07
-- Customs data shows Korean corn imports have increased +1% compared to the same time last year, to 5.117 mil tons total
-- 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.
-- Russian authorities ban the import of poultry products from 28 US facilities, acc. to Russian news agencies. Poultry industry group says 17 US poultry plants & 5 storage warehouses have been barred from exporting product to Russia, the ban is set to begin on Nov 1, but industry group says Russian gov't did not give explanation for reason of ban. The other 11 facilities were pork product producers.
-- The latest numbers in the Senate Farm Bill include $4.2 billion for food stamps, $3.7 billion on land stewardship, and $1.3 billion in biofuel advancement/funding
-- The latest debate in the Senate Farm Bill surrounds the "average crop revenue" program, focusing aid on actual farm revenue rather than price levels
-- Blending of ethanol into conventional gasoline increased +2.6% in the latest EIA statistics to 1.94 mil bbl/day on winter blending, price differentials
-- Dalian Corn futures rose overnight, active May contract 16 Yuan/mt higher
-- eCBOT Corn Vol: 102,729; Pit Vol.: 26,160; Open Interest change: +7,182
-- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Below Precip. The Corn Belt will see showers and thunderstorms ending in the eastern areas today.
-- Outside markets. Energy: Lead month Nov crude 20c higher makes intraday high of $90.45, products mixed heating oil higher, gas lower ; Gold & Silver: both higher; US $ up slightly vs. Euro, down slightly vs. Yen
Cash Markets
--CIF Corn steady weak. Oct. +60 to +62, Nov. +64 to +66, Dec. +64 to +66, Jan. +52 to +54, Feb. +52 to +54, Mar. +50 to +53, A/M +40 to +43
TREND:
The question in corn is now---island top or island bottom---still range trade and now up into resistance.
Wheat still feels like a dead duck---just flapping around. Spreads weakened in spite of higher flat price today. 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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