The corn market closed lower on Tuesday on spillover selling in the wheat market and the sell off in outside markets. Wheat closed limit down after trading 20-30 cents lower most of the session. Rumor in trading circles was that Russia was now not going to raise its import tariff from 10% to 30%. That was then confirmed overnight pushing wheat even lower. Crude oil sold off during the session yesterday helping to push corn lower. Early in the session, corn seemed to hold its own against the outside markets, but it starting sliding lower with the sell off in wheat. Volume was light/moderate and funds sold 3,000 contracts. Weather remains a non-factor here in the US as the wet weather in the west is slowing some of the harvest, but it is ahead of schedule in the middle and east part of the Midwest. Very little new news out on the corn market, so we will see a very muted trade and corn will be a follower.
eCBOT market was a little lower overnight on the back of the continued sell off in the wheat market with the December contract down another 16 cents overnight. Some traders want to talk about this being the end of the wheat market and that we are beginning to see an extended break. With little to no new news on the corn market, traders will want to watch wheat for direction. Weather in So. America remains excellent. Argentina has had nearly ideal conditions over the last month and Brazil that was dry early in the season has been getting good rains. Outside markets also pressured the market as metals and energies are lower and the dollar was firmer. Nothing has changed in the corn market as it continues to have harvest pressure pushing it lower and excellent demand keeping the corn market from completely breaking down. Weekly exports will be released tomorrow morning and the market continues to expect a big number. So. Korea importers tender to buy 110,000 tones of corn for February delivery. We look for corn to trade in a range until harvest is completed or there is new news out of So. America that will move the market.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 359^0 -2^0 362^4 358^6
ZCH8 375^6 -2^0 379^0 375^4
ZCK8 386^4 -2^0 389^4 386^4
ZCN8 395^2 -1^6 398^0 395^0
Early Opening Calls: 2-3 lower
Top News
-- 110,000 mt various origin Corn sought in tender by S Korea for Feb delivery
-- After weeks of speculation, the European Union has formally approved four GMO varieties for food/fodder consumption - 3 corn, 1 sugar beet - these varieties are still not allowed to be domestically produced, however
-- Dalian Corn futures modestly higher, up 6 Yuan/mt to finish at 1,648 Yuan/mt basis the actively traded May futures
-- eCBOT Corn Vol: 97,140; Pit Vol.: 24,009; Open Interest change: +1,521
-- Weather: Above Normal Temps. Normal to Below Precip. Rains will end in the eastern Corn Belt later today. Thursday and Friday will see scattered showers and thunderstorms.
-- Outside markets. Energy: crude lower, products mixed ; Gold & Silver: both lower; US $ slightly higher vs. Euro, slightly lower vs. Yen
Cash Markets
--CIF Corn off 1- 2 . Oct. +57 to +60, Nov. +61 to +62, Dec. +60 to +62, Jan. +52 to +54, Feb. +51 to +53, Mar. +50 to +53, A/M +41 to +43
TREND:
Wheat trade today was bearish, initially because of the inability to follow through following Monday's strong trade, and secondly due to the limit down settlement. The failure to reach the 8.83 resistance level portrays weakness. Expect a weaker trade now with the possibility of a weekly reversal if Dec settles under 8.55 ½ on Friday. With this weaker trade, the bear spreads, especially July/Dec, now has the making of a potential big move. The locals who have been covering the bear spreads jumped back on the short side of the spreads pretty hard when the opening failed to follow through on overnight strength.
The Dec corn is still stuck in this trading range. On a trade back to 3.45, be ready to sell puts.
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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