The corn market was lower on Monday on the back of an increase in the dollar and profit taking after the corn market rallied almost 20 cents last week right in a huge US corn harvest. A higher US$ caused selling across the commodity markets and the grains were not left out. Wheat was the only grain market to buck the trend and it is being propelled by rumors out of Russia because of very small stocks. This jump in wheat prices probably helped corn recover from the early loses. The December contract closed down almost 6 cents but was well off the lows that we saw earlier in the session. The volume was light/moderate and funds were net sellers of close to 3,000 contracts. Traders also said that there was a pick up in harvest after drier weekend weather which was bearish futures.
eCBOT market was higher overnight continuing the rally we saw during the later part of the day session yesterday. Crop progress showed corn harvest at 60% complete vs. 53% last week, 51% last year and 55% 5yr average. These numbers are within the normal ranges and will have little affect on the corn market today. Argentine corn planting is estimated at 53.7% planted vs. 33% last week and 42% last year. Traders this morning will point to a weaker dollar as helping the grain markets, especially the corn market as there is very little new news out on the corn market. Corn is a follower and will look to outside influences for direction. Nothing has really changed in the corn market as exports and demand remains excellent and the US is in the middle of a huge US corn harvest. Look for the US$, outside markets, and wheat to give direction for the corn market today.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 367^4 3^0 368^0 364^0
ZCH8 384^0 3^0 384^2 380^2
ZCK8 393^0 1^2 393^0 391^2
ZCN8 402^4 2^6 403^0 399^4
Early Opening Calls: 1-3 higher.
Top News
-- High prices turn off Philippines for 70,000 mt of Corn in overnight tender, but officials say likely to retender in Nov.
-- 53% of corn has been planted in Argentina in latest week, up from 33% seen week ago & up from 42% seen in same week year ago
-- Monday's USDA crop progress report shows Corn harvest was 60% complete in latest week up from the 53% complete last week & ahead of last year's 51% pace & 5 yr avg pace of 55% complete.
-- Dalian Corn May futures off slightly 1 Yuan/mt, rest of complex lower also in overnight trade
-- Monday's USDA Corn Export Inspections: 39.345 mln mt; expected 41.5 mln mt
-- eCBOT Corn Vol: 105,333; Pit Vol.: 17,337; Open Interest change: +1,864
-- Weather: Above Normal Temps. Normal to below Precip. The eastern Corn Belt will see showers and thunderstorms today.
-- Outside markets. Energy: crude 30c higher, products higher ; Gold +$4.10 & Silver: 14c higher; US $ lower vs. Euro, slightly higher vs. Yen
Cash Markets
--CIF Corn steady up 1. Oct. +61 to +63, Nov. +64 to +65, Dec. +63 to +65, Jan. +52 to +54, Feb. +52 to +54, Mar. +51 to +53, A/M +41 to +44
TREND:
The inability to put this wheat market back into a bear scenario is a warning sign. There has always been the potential that an initial break in prices was followed by another test of the strength seen when crop problems were obvious. This side of the rally, should it develop, is the demand side kicking in harder. How do we know? A strong close over the Oct reactionary high at 8.83 would be a strong indication. Half of the last break is 8.86 and a wheat market that is done with a rally does not give you a chance to sell 50 pct re-tracements? Stay tuned
Corn is tied to this wheat market as well. The difference is a harvest-taking place. While still range bound, a close above last weeks highs at 3.71 would be a strong indication that the upper end of the range was in danger of coming out
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
Futures trading involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future trading results. Trading commentary and analysis is based on information taken from trade and statistical services, news services, and other sources which we believe to be reliable. We do NOT warrant that such information is accurate or complete, and it should NOT be relied upon as such. Our policy is to publish market research that is objective, clear, fair, and not misleading. Trading commentary and analysis reflects our good faith judgment at a specific time and is subject to change without notice. There is no assurance that the advice we give will result in profitable trades. All trading decisions will be made on a strictly unsolicited basis by the account holder.
