The corn market ended higher on the day as the market probably saw a little spillover from the limit up move in the wheat market. There was very little new news to move the corn market higher as the US continues to receive good harvest weather with the above normal temps and continued reports of excellent yields. The weaker US$ also helped the grains move higher because it makes grains that much cheaper to the world market that is already looking for grains. Informa released their 2008 planting estimates and the market seemed to shake it off. As a leading grain analysts said, these are just really guesses, they didn't take any survey's or talk to any actual producers.
eCBOT market was lower overnight as we saw a overall sell off in most commodity markets overnight. This sell off in commodity market comes on the heals of a rally in the US dollar and the sell off in the equity markets. There is very little new news out overnight on the corn market, so traders are looking at outside markets for direction. Gold and crude were in the middle of long liquidation overnight into this morning. A rally in the US$ makes US commodities more expensive to the rest of the world. Talking to traders this morning, we are seeing some profit taking in the corn market as the December contract rallied almost 20 cents last week on very little new news and traders have been wanting to sell the corn market with the huge US corn crop coming in and no trouble in So. America. We still look for corn to be a follower today and look for more profit taking. We will watch the wheat and bean markets to see how much the corn is going to break today as some traders want to talk about limit down in wheat and possibly the bean market.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 362^0 -8^2 368^6 361^4
ZCH8 377^6 -8^2 384^4 377^6
ZCK8 388^0 -9^0 396^0 388^0
ZCN8 397^2 -7^2 403^0 397^2
Early Opening Calls: 8-10 lower
Top News
-- Dalian Corn futures active May contract 13 Yuan/mt lower
-- eCBOT Corn Vol: 123,176; Pit Vol.: 28,204; Open Interest change: +3,221
-- Weather: Normal to Below Temps. Normal to Below Precip. Corn Belt will see showers and thunderstorms move west to east today into Tuesday.
-- Outside markets. Energy: crude $1.40 lower, products lower; Gold off sharply -$15.00 & Silver: off 20c; US $ sharply higher vs. Euro, lower vs. Yen.
Cash Markets
--CIF Corn steady weak . Oct. +60 to +63, Nov. +63 to +65, Dec. +63 to +66, Jan. +52 to +54, Feb. +52 to +54, Mar. +51 to +53, A/M +41 to +44
TREND:
Wheat ended the day about 2 to 3 above limit. This is now 45 cents off contract lows and matches the rally levels in past corrections since we have topped wheat. However, if this market gaps away from these levels again on Sun/Mon, could portent a stronger retracement?
Corn is also up into a level that should have problems. However, several strong closes over 3.70 could portend a stronger recovery. There is a concern around some circles that the corn crop is still shrinking---ala the USDA Oct yields down again in the next report? We are still in a harvest mode in spite of the fact that we are on the downhill run. The carrying charge spreads tended to tighten this week but see limited gains here. More aggressive fund roll of long Dec contracts has started and the Goldman roll is only 10 days away. The spreads will come under more pressure in coming weeks. Applies to beans and wheat as well as corn.
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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