The market moved lower on Thursday on the back of the lower move in the outside markets and the lack of any fresh fundamental news. The December contract closed down over 8 cents and near the session lows. The outside markets, especially, crude and the metals, helped push corn lower as both markets were down sharply early in the day and stayed lower. One trader said he saw speculative selling/liquidation come in late that helped push the market lower. Technicians pointed to both the Dec and March falling below their 20 day moving average which created selling pressure. On traders also said there was a lot of corn/wheat liquidation going on today as well. Volume was light to moderate and funds sold over 4,000+ contracts. Traders await the release of the USDA weekly export sales tomorrow morning looking for some positive fundamental news. Very little news out about corn, so many traders are looking more macro and watching the outside markets. Weather in So. America is not an issue currently, everything is fine.
eCBOT market was higher overnight on quiet trading with the December closing 1 ¼ higher. Traders awaited the release of the export sales overnight so the market had little reason to move. The USDA released export sales this morning of 1.363 mil which was within the trade estimate of 1.2-1.5 mil. This number is not exciting, but expected as it seems the corn weekly export sales are always over 1 mil, week in and week out. The soybean and wheat export sales were very strong. The bean number is probably already in the market, but the wheat number was much stronger than expected. The strong weekly export sales will help push the grain complex higher, especially with the stronger outside markets. The gold market is $5 higher and crude is $1.00 higher. Weather remains pretty good in So. America, but some private forecasters are looking at Argentina to dry out and possible problems into December. We look for corn to be higher this morning, but it will be a follower. Look to the other grain markets and the outside markets for direction, along with the investment funds. Commodities look to go higher today and that will help the corn market move higher. Remember, corn was down over 8 cents yesterday, so there could be some short covering.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 376^0 1^2 377^4 374^2
ZCH8 393^0 1^2 394^4 391^0
ZCK8 401^6 0^0 404^0 401^4
ZCN8 411^0 1^0 412^2 409^4
Early Opening Calls: 2-3 higher
***USDA Corn 07/08 Export Sales Net: 1.363 mln mln mt; 08/09 Net: 300 mt; expected 750k-1.5 mln
Top News
-- Strategie Grains: Total EU bloc corn harvest pegged at 46.7 mil tons, an increase of +2% from previous estimates - by comparison, 2006's harvest totaled 53 mil tons
-- 456k mt of import Corn licenses were granted by the EU grain committee mgmt board, year to date import licenses total 6.15 mln mt vs. 1.72 mln granted in same period year ago
-- Barge traders talking about falling river levels and draft restrictions that may come.
-- Dalian Corn futures fell 20 Yuan/mt to 1,757 in overnight trade
-- Analyst expect Nov 1 cattle on feed to be 98% of year ago, however, placements on feed lots during October were expected to be 110% of year ago placements.
-- eCBOT Corn Vol: 240,421; Pit Vol.: 55,398; Open Interest change: -2,983
-- Weather: 6-10 Day Forecast: Below Normal Temps. Above Normal Precip. The Corn Belt looks dry today into Monday.
-- Outside markets: Energy crude 90c higher at $94.33/bbl; Gold $7 higher & Silver 15c higher; US $ lower vs. Euro, unchanged vs. Yen basis the Dec futures
Cash Markets
--CIF Corn steady up 2. Nov. +?? to +60, LH Nov. +58 to +61, Dec. +64 to +65, Jan. +53 to +55, Feb. +53 to +55, Mar. +52 to +54, A/M +41 to +43
TREND:
The rally today in wheat may have been overblown because of all the talk of frost in Argentina. We looked at today as a sell day in wheat. If we happen to see further strength in wheat on Friday we look to be a seller again. Rallies should be somewhat limited. The weakness in corn was not all that unexpected. We may have gotten close to heavier liquidation under 3.73 ½. It will be interesting to see if some stops are there on a lower trade tomorrow. Breaks under 3.70, basis the Dec, should find support.
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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