The corn market couldn't hold the highs from Sunday night or the opening and immediately sold off. The March contract closed 2 ½ lower on the day, about the middle of the daily trading range. Traders pointed to speculative selling and profit taking after recent run ups. Also, there was pressure from some outside markets with both the bean complex and crude oil trading lower right from the opening. Corn is still a follower and when the soybeans and the wheat sold off right from the opening, corn went along for the ride. Beans did recover late in the day, but corn really couldn't gather much support without any fresh news. Corn has made a pretty impressive run and all the bullish news may be built in the market, so if it doesn't get any new news, it will sell off. Volume was moderate/heavy and funds sold 4,000+ contracts on the day. Traders also pointed to the crude market as taking some of the air out of the corn bubble. The underlying support for the corn market is from export demand as that continues to be very good and surprising the market to the upside almost every week.
eCBOT market was lower overnight continuing the sell off that we saw yesterday, but it was a relatively quiet overnight with little to no new news. So. Korea was back to the US to buy another 220,000 tones of corn overnight. Israel also announced a tender of 56,000 tones of corn from probably either the US or So. America. This is another example of exports remaining strong and helping to support the corn market. Traders point to this time of the year as a rough time to trade unless new news hits the market. The US crop is in the bin and we have a pretty good idea of what the yield is going to end up and So. America is just getting going. We like to compare this time of the year to the middle of June to July 4th here in the US. The markets will be choppy and will have a hard time extending gains or pushing losses as a rain shower or the lack of a rain shower in So. America can swing the markets short term. Outside markets are lower this morning with crude down almost $3 and gold down $10-$15 helping to push the grain markets lower. Beans recovered yesterday on the close to support corn, but the bean market was lower overnight. Look for corn to open lower on the opening and then look for direction from other markets. China is still the big wild card for corn as bean production was lower than expected and they have been buying US beans and some traders are expecting lower corn production. The million dollar question is whether they will be buying US corn or if they have enough.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 385^0 -0^6 386^0 384^0
ZCH8 401^6 -1^4 403^4 401^0
ZCK8 412^4 -0^6 413^2 411^2
ZCN8 422^2 0^0 422^2 420^0
Early Opening Calls: 1-2 lower
Top News
-- Monday's USDA Corn Export Inspections: 47.632 mln mt; expected 52.5 mln mt
-- Position day for CBOT December contracts is Thurday with first notice on Fri AM.
-- Dalian Corn futures fell 17 Yuan to 1783 Yuan/mt basis the May futures, other contracts were also lower.
-- eCBOT Corn Vol: 168,017; Pit Vol.: 41,476; Open Interest change: -12,640
-- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to below Precip. The Corn Belt looks dry
today and most of Wednesday.
-- Outside markets: Energy complex: crude off $.182 at $95.86/bbl ; Gold off $8.60 @ $817.90 & Silver off 29.5c to $14.535/oz; US $ lower against both the Euro & Yen
Cash Markets
--CIF Corn steady off 1. LH Nov. +?? to +51, Dec. +51 to +56, Jan. +52 to +54, Feb. +52 to +55, Mar. +49 to +54, A/M +41 to +43 J/J +42 to +45
TREND:
Chi wheat ran back to cover half of the last break. The 90 cent rally surprised some with its extent---and it only took 4 days bottom to top. Spreads were also tugged into short covering as well. The H/N gained 32 cents in the same 4 days. Even with that the July contract was tugged into new contract highs.
Corn prices continue to feel as though they want to take out the upside for a more thorough test of the winter highs. The reversal today would be meaningful if weakness continues tomorrow. There was a slight increase in farmer selling again this morning.
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.
