Traders pointed to profit taking and outside markets as the reason for the sell off in the corn market today as the December contract closed down near session lows, down almost 6 cents. Active harvesting of a record US corn crop also seemed to set the anchor for the corn market again today. After the release of the USDA crop progress report showing 73% of the US corn crop harvested, many traders felt it was tough to buy the futures market. Demand remains excellent from ethanol producers and exports which is helping to support prices. So. Korea, Taiwan, and Philippines were all tendering for corn in the next couple of weeks. Traders also pointed to position squaring before the end of the month and the fed announcement this afternoon. There is very little news for the corn market, so look for it to follow the other commodity markets
eCBOT markets were higher overnight on some short covering, higher outside markets, and the lack of deliveries in the soybeans. So. Korea passed on its tender for 110,000 tones of corn and Taiwan passed on its tender for 29,000 tones of US corn. New Argentine president is said to be considering raising taxes on corn, beans, and wheat to boost gov't revenue. Will that have any affect on their exports? Outside markets were a little stronger overnight and the US$ was lower as everybody in the markets wait for the Fed interest rate announcement at 1:15pm CST. With no new news, we expect corn to trade in a range and look for direction from the other outside markets. Weather remains a non-factor as it remains dry in the western corn belt and harvest there is catching up to the other parts of the Midwest. The weather forecast for So. America remains pretty good, but there is some talk of a reduction in rain for some areas of Brazil but it is still very early in the growing season.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 372^4 2^2 374^6 368^0
ZCH8 389^4 2^0 391^2 385^0
ZCK8 400^4 3^6 401^0 395^0
ZCN8 409^0 2^2 410^4 404^4
Early Opening Calls: 1 to 3c higher
Top News
-- 110,000 mt of Corn for February delivery were passed by S Korea Wednesday
-- Taiwan passed on tender for 29,000 mt. US Corn and 16,000 Soybeans for Nov/Dec.
-- Argentina's budget-conscious government may impose additional export duties on ag products to raise funds, acc. to gov sources
-- Corn refiner, Corn Products, posted higher quarterly profit, but it fell short of expectations; Company said gross margins fell slightly during quarter to 16.2% from 16.6%, hurt by "significantly higher" corn costs and increasing energy prices
-- Bush administration may soon name an official USDA Secretary - acting boss Conner likely pick, suggest trade sources
-- Dalian Corn futures fell 6 Yuan/mt to 1,712 Yuan/mt basis the May contract
-- eCBOT Corn Vol: 121,413; Pit Vol.: 26,394; Open Interest change: +4,472
-- Weather: Normal to Below Temps. Below Normal Precip. The Corn Belt will see a few light showers in the northern regions today
-- Outside markets. Energy: crude 60c higher @ $91.00/bbl, products rebound up 250pts; Gold & Silver: slightly higher; US $ slightly higher vs. the Euro & Yen basis the Dec futures.
Cash Markets
--CIF Corn steady. Oct. +58 to +60, Nov. +58 to +60, Dec. +60 to +62, Jan. +50 to +52, Feb. +50 to +53, Mar. +50 to +51, A/M +40 to +43
TREND:
Corn tries to break out of the trading range. I feel it may very well do that later this year but timing is all wrong right now. A Dec rally would fit my timing much better? Look for a chance to buy CZ between 3.55 and 3.50 on this next break. Take advantage of it. Come away from bear spreads in the next week to 10 days.
The wheat market continues to be the favored short in this office. Bear spread old crop, Bear spread new crop. Combine them both? Be long KC vs. short Chi. Can do the same in Mpls. Quality wheat should hold better than soft. Yes soft wheat is getting relatively cheap compared to hard wheat---but not to the world trade where US soft wheat demand will most likely be covered out of the Black Sea or EU? Spreads may be a more palatable way to be short wheat---then you do not have to sweat so hard on rally days like yesterday.
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.
