The corn market was higher on Friday with really no new news as the corn market seems to be following other markets. Outside markets remain very strong as crude oil continues to make new highs and the US$ continues to slip against major foreign currencies. A weaker US$ makes corn and other grains cheaper for export and the US remains the one place in the world that seems to have extra grain. Volume was light/moderate and funds were big buyers, over 10,000+ contracts by the end of the day. The market is seeing buying across most commodities and that is what is happening in corn as some traders feel long corn is a hedge against inflation. The corn market stayed higher even when beans broke down late in the session as there really wasn't any big selling interest in corn. Technically, corn hit new 4-week highs and closed very strong for the week. Volatility remains very high as corn had over a 20 cent range on the week and only closed 1 ¾ higher for the week.
eCBOT market was higher overnight as the outside markets continue to out perform and corn continues to follow. Crude and gold both were very strong overnight and continue to make new highs. Beans were also strong overnight closing almost 12 cents higher and the late break on Friday. November options expired on Friday and that added some intrigue as there was 3,500 Nov bean $10 calls that were exercised even though the strike was 4 cents out of the money. This added bullish momentum to the grain markets on Sunday night. Weather remains good here in the US as the western corn belt continues to dry out allowing farmers to get in the fields and catch up with harvest. In So. America, weather remains neutral as most areas are receiving some rains, but it will be spotty, with some areas estimating net drying this week. Brazil and Argentina remain very important to the world grain markets and will help the US farmer decide what he will plant this spring because of the price action. Exports remain strong as you have Israel tenders 56,000 tones of US corn and US exporters sell over 167,000 tones of corn to Japan for 07/08 delivery.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 376^0 4^0 377^2 371^2
ZCH8 392^6 4^0 394^0 387^6
ZCK8 403^0 4^0 404^0 395^0
ZCN8 413^0 5^4 413^0 406^4
Early Opening Calls: 4 to 5c higher
Top News
-- 64% of Argentina's Corn crop has been planted vs. the 55% seen same time last year, acc. to the country's Ag Sec. office
-- Analysts expect Corn harvest pace at 70% complete in Monday's USDA crop progress report
-- Commitment of Traders report with Options as of October 23 shows Funds: Corn Long 155,751 up 6,466
-- Dalian Corn futures 40 Yuan/mt higher basis the May contract on over 1 mln contract volume
-- eCBOT Corn Vol: 137,637; Pit Vol.: 38,943; Open Interest change: -2,264
-- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Below Precip.
-- Outside markets: Energy: crude 75c higher made new contract lifetime high at $93.20/bbl, petrol products higher; Gold Dec +$4.20, Dec contract high $798.30 in territory not seen since Jan 1979 & Silver 20c higher; US $ down vs. Euro, slightly higher vs. Yen
Cash Markets
--CIF Corn weaker off 2. Oct. +59 to +60, Nov. +60 to +62, Dec. +61 to +63, Jan. +51 to +54, Feb. +51 to +54, Mar. +50 to +53, A/M +41 to +44
TREND:
Wheat has developed some momentum to the down side but the markets that are moving quickly are the carry charge spreads and corn/wheat. These charts have big ugly tops on them and imply wheat has to go lower---or new crop wheat and corn are going to rally big time? Play the spread instead of flat price? Deutsche Bank roll to the WZ8 looked to have started today closing the spread shown below much wider in one day
Corn is still in the range but is making all the noise that could take it back to the highs and threaten a break out again. Needs another good close to confirm the break 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
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