The corn market closed lower on Monday on the back of the outside market and the weakness in the soybean market. The March contract is now the front month and it closed 2 lower on quiet trade. Historically, corn rallies the week of Thanksgiving, but the outside markets, gold and crude, which were higher earlier in the morning we down on the day by the time the grain markets opened. On top of the outside markets, there was spillover selling caused by the lower move in beans and meal. Fund selling was limited at 2,000 contracts, but some traders felt there was speculative selling that helping keep a lid on any attempt to rally the market. Traders also pointed to light wheat/corn spreading on the floor today that helped push it lower. Export Inspections released after the close at the top end of the estimate which should help corn overnight. Technically, traders pointed to the March closing below the 10 day moving average which will be looked at as negative.
eCBOT market was lower overnight on light trade even with the outside markets higher. The gold and crude markets were all higher overnight with crude up $1.00 and gold up over $10. Historically, there is very little news out about the corn market this time of the year. USDA released harvest progress that showed 97% harvested vs. 94% last week and 93% last year. This news will have little effect on the corn market as harvest is pretty much considered finished. The dollar is close to new lows vs. major currencies which should lend support to the grain markets, but it will be tough to get buyers willing to buy higher grain markets unless you get specific positive grain news. We did get some positive news this morning with the USDA announcing So. Korea bot 374,000 tones of US corn overnight. This comes on the back of good export inspections released yesterday during the trading session. Remember, December options expire today so that could cause some volatility, but yesterday's price action took the $4.00 strike out of play unless corn goes limit up. Weather remains a non-factor as there is no problems in So. America and it is very early in the growing season. Look for corn to have a 2 sided trade today but watch the outside markets. Crude and gold remain strong this morning and will help support the grain markets, but will probably not be able to cause fresh buying to come into the grain markets.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 376^6 -0^6 377^4 374^0
ZCH8 393^6 -0^6 394^4 391^0
ZCK8 404^0 -0^6 404^6 401^0
ZCN8 411^6 -1^2 413^2 409^2
Early Opening Calls: mixed, maybe slightly higher
Top News
**USDA Wheat Inspections: 23.948 mln bu.
**USDA Corn Inspections: 52.287 mln bu.
**USDA Soybean Inspections: 23.566 mln bu.
-- Corn harvest was 97% complete in Monday's crop progress report vs. 93% last year & the long term average of 94%. Next Monday, Nov 26 will be the final report until early April 2008.
-- Argentina's Corn crop seeding 75% completed in latest weekly crop progress report vs. 69% pace seen last year, acc. to Ag Sec data
-- Dalian May Corn futures were 29 Yuan/mt lower to 1,723 Yuan/mt in overnight trade
-- eCBOT Corn Vol: 132,104; Pit Vol.: 20,203; Open Interest change: -2,588
-- Weather: 6-10 Day Forecast: Below Normal Temps. Below Normal Precip. Most of the Corn Belt will be dry today. Showers and some snow start late tonight and moves west to east into early Thursday.
-- Outside markets. Energy: crude $1.00 higher; Gold $13.00 higher & Silver: 32c higher; US $ lower vs. Yen & makes new record low vs. Euro in cash market
Cash Markets
-- CIF Corn steady off 3. LH Nov. +57 to +58, Dec. +60 to +62, Jan. +53 to +54, Feb. +53 to +56, Mar. +51 to +54, A/M +41 to +44 J/J +42 to +45
TREND:
Bull gets his turkey for Thanksgiving and the Bear gets his for Christmas. Too many looking for a strong close into the end of this week?
Not much change in my outlook---sell the rally in wheat. Use today as a chance to do more KC-Chi. It has a long way to go.
Corn has value at 3.70 to 3.60. Be prepared to do pricing in this area. The up side of corn is looking to have more potential?
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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