The corn market closed higher on Friday as the market was more influenced by the outside markets than any grain news. We may sound like a broken record, but with harvest completed, this is usually a slow news time for the grain markets. The only real news out yesterday was weekly export sales which were termed favorable by most analysts, but nothing extraordinary. Weekly export sales, 1.364 mil were good, but well within the expected range. Traders also pointed to some support from the corn/wheat trade as helping corn as the wheat market sold off over 15 cents. Funds were net buyers of 7,000 contracts as traders said there was some short covering after the sell off on Thursday and the weaker dollar on Friday. The weather picture remains clear as traders stop really looking at the US and now are paying much more attention to So. America. US weather is more important winter wheat than corn now that harvest is completed. Commitment of Traders released on Friday after the close showed large speculative traders reduced their long CBOT corn futures and options on futures positions by 10,129 contracts and cut their short positions by 4,386 contracts and are now net long 153,280 contracts as of Nov. 13, the CFTC reported Friday in the commitment of traders' supplemental report.
eCBOT market was higher overnight on the back of the soybean rally and higher outside markets. Very little news out on the corn market overnight except for some export news as So. Korea announced late on Friday that it purchased 385,000 tones of US corn and Morocco announced a tender for 70,000 tones of corn. So. Korean news helped lend support to the corn market overnight as export sales need to continue to be strong to reach the new USDA estimates for export sales this year. Outside markets remain supportive as the dollar is now weaker against major currencies and the metals and crude are all higher this morning. Soybeans are the leader of the grain complex right now and corn will be a follower. News that China keeps buying US beans is the driving force in the grain markets with little word out of China about corn. A seasoned trader made a very observation about China and that was that you should pay attention to rhetoric out of China by their officials, but pay attention to their actions. They are telling the world that they aren't building stockpiles of beans, but they have been buying a lot of US beans. We look for the corn market to open inline with the overnight closes and it will look to the other markets for direction.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 384^6 5^2 385^0 378^2
ZCH8 401^0 4^4 401^6 395^4
ZCK8 411^6 5^4 411^6 406^0
ZCN8 420^0 5^2 420^0 413^6
Early Opening Calls: 3-5 higher
Top News
-- 385,000 mt of US Corn bought by S Korea for March to May delivery
-- 70,000 mt Corn sought in tender by Morocco
-- Dalian Corn futures 5 Yuan/mt lower to 1752 Yuan/mt
-- eCBOT Corn Vol: 138,548; Pit Vol.: 39,273; Open Interest change: -4,835
-- Weather: 6-10 Day Forecast: Below Normal Temps. Above Normal Precip. The Corn Belt will be mostly dry today. Rain and some snow will move west to east Tuesday and Wednesday.
-- Outside markets. Energy: crude higher, products higher ; Gold $1.30 higher & Silver: slightly higher; US $ lower vs. Euro & Yen
Cash Markets
--CIF Corn steady off 2. Nov. +?? to +58, LH Nov. +57 to +58, Dec. +63 to +65, Jan. +54 to +55, Feb. +53 to +56, Mar. +52 to +54, A/M +41 to +44
TREND:
I continue to expect these markets to set back further. Suspect it has to come on outside markets correcting deeper than we have seen so far
Wheat marked time all week and should now be ready to make another charge to 7.00 in WH.
CZ should have trouble on rallies but should find all sorts of support from the cash at 2.70 to 2.60. Take off new crop hedges on a test of 4.00---or leave them on and sell 3.80 puts against the short sales.
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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