The corn market sold off on Thursday on the back of lower outside markets, weaker export sales and technical selling. Commodities seemed to built up over the last couple of days and the market took profit today. Corn was higher overnight because of higher outside markets and a weaker dollar, but by the time the corn reopened, crude and gold were lower on the day and dollar was rallying to session highs. For the first time in I don't know how many weeks, weekly export sales were lower than expected and with no other news, it made a difference. Corn was also led lower by spillover selling from the wheat market as it traded limit down off and on late in the session. Cash traders also said they saw some pick up in farmer selling with the higher futures prices and firming basis levels. Option trade was very active with the trade being supportive of December futures with put selling and call buying and bearish March futures with a lot of call selling. Weather was negative corn for both the US and So. America. Funds were net sellers of 5,000 contracts. Israel was a buyer of 60,000 tones of US corn and Taiwan is going to re-tender up to 29,000 tones on Friday morning and another 35-60,000 tones next Tuesday
eCBOT market was higher overnight with a brief rebound from the sell off yesterday as the crude oil also rallied overnight. There is very little new news out about corn overnight. On the export front, Taiwan did buy 23,000 of US corn yesterday and private exporters reported to the U.S. Department of Agriculture export sales of 235,000 metric tons of corn for delivery to South Korea during the 2007/2008 marketing year. The 2007/2008 marketing year for corn began September 1. It is very interesting that So. Korea keeps coming back to the US for corn instead of getting its corn from China. FC Stone pegged the 2007-08 U.S. corn crop at 13.240 billion bushels on Thursday and the soybean crop at 2.651 billion bushels. FC Stone estimated corn yield at 153.8 bushels per acre and soybean yield at 42.2 bushels per acre. This news was released after the close and shouldn't have a big effect on the market today. Informa is set to release their production estimate later this morning. Corn is still a range trade and will look to outside markets for direction. The only kicker today could be fund trade from the expect roll by Deutsche Bank index fund from Dec07 to Dec08
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 371^2 2^4 372^0 368^2
ZCH8 388^4 2^4 388^6 385^6
ZCK8 398^4 2^6 398^4 395^0
ZCN8 407^4 2^6 407^4 404^0
Early Opening Calls: 2 to 3c higher
Top News
-- USDA reports private sale of 235,000 mt of Corn sold to S Korea for delivery in 07/08
-- EU officials have granted licenses for the import of 457k tons of corn this week
-- South Korea Friday bought 110,000 mt. US Corn for Feb. delivery
-- Taiwan tendering for 23,000 mt. US Corn and 12,000 Soybeans for Dec
-- Taiwan purchased 23k tons of corn and 12k tons of soybeans from the US at tender, acc. to traders
-- FC Stove Nov production estimates US Corn production at 13.240 bil.bu. vs. September estimate Of 13.445
-- US Farm Bill debate continues in the Senate - Majority Leader quoted as saying it may be done within a week, but other legislature may compete for time
-- Dalian Corn futures 8 Yuan/mt higher basis the May contract.
-- eCBOT Corn Vol: 117,125; Pit Vol.: 46,806; Open Interest change: -1,030
-- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Below Precip.
-- Outside markets. Energy: Crude 25c higher at 93.73/bbl, product higher also ; Gold $4.00 higher & Silver: slightly higher; US $ mixed, lower vs. Euro, slightly higher vs. Yen.
Cash Markets
--CIF Corn steady. Nov. +55 to +58, Lh Nov. +57 to +60, Dec. +59 to +61, Jan. +49 to +52, Feb. +49 to +52, Mar. +49 to +52, A/M +40 to +43
TREND:
Corn looks more vulnerable to a break again after the trade today. Initial support at 3.60 but look for a test of 3.50. The turn in the markets today coincided with cycle timing.
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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