The corn market was lower today with the sell off in the outside markets, a firmer dollar, and lower soybean markets. The March contract closed 2 ½ lower. The crude oil market was over $3 lower today and the corn market followed it lower with the lack of new news that would have lent some support. Traders also pointed to December liquidation in front of First Notice Day on Friday. The dollar was firmer which will hurt the commodity markets as well. The bottom line is that corn is a follower and when soybeans and crude oil are down significantly, corn is going to be lower. Good exports helped give the corn market some positive news, but not enough to keep it higher on the day. Also, on the plus side, COT showed large speculators held the largest net long position in corn on a percentage basis since mid-March. Volume was light/moderate and funds sold 4,000+ contracts. Traders pointed to a tug of war today with the declining outside markets on one side and the demand by exports on the other side.
eCBOT market was lower overnight on the back of the outside markets. Very little news out overnight except for the gold market being down over $15 early this morning and the US$ firming up 40 pts. So. Korea announced they may delay corn buying for May delivery, but I don't think this will have much affect on the market. The crude oil market was lower earlier overnight but this morning is recovering and is actually higher this morning. Corn traders will look at the outside markets and soybeans for direction with little to no news out. Weather in So. America remains a non-factor even as some analysts want to talk about drying conditions in Argentina as the rains that are forecast will have a hard time keeping up with evaporation. We look for the corn market to open a little lower this morning based on the lower outside markets and firmer US$ which would be bearish the grain markets. Crude oil is higher this morning and it will lend support to the corn market, but it seems the beans are the leader of the grain complex. This time of the year, it seems like you don't want to buy strength or sell weakness because it will be tough to carry the markets.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 381^2 -2^2 384^4 380^0
ZCH8 398^4 -2^2 401^6 397^0
ZCK8 409^0 -1^6 412^0 407^4
ZCN8 417^6 -1^6 420^4 416^6
Early Opening Calls: 2-3 lower
Top News
*USDA reports private sale of 120,000 mt of US Corn for 2007/08 delivery to S Korea
-- Position day for CBOT December contracts is Thursday with first notice on Fri AM.
-- EPA raises 2008 renewable fuels blend requirement to 4.66% from 4.02% in 2007 in effort to reach standards set in 2005 mandate requiring 5.4 bln gallons of renewable fuels blended. By the year 2012 current mandates will require 7.5 bln gal of renewable fuels to be blended.
-- Dalian Corn May futures settled -1 Yuan at 1782 Yuan/mt on 1.12 mln contracts traded.
-- eCBOT Corn Vol: 116,153; Pit Vol.: 41,173; Open Interest change: -16,225
-- Weather: 6-10 Day Forecast: Below Normal Temps. Below Normal Precip. The Corn Belt will see some light snow favoring the north today.
-- Outside markets: Energy: crude 27c higher $94.69/bbl, products up slightly; Gold off $10.50 @ $802.50 & Silver off 6.5c at $14.42; US $ slightly higher vs. Euro & Yen in Dec futures contracts.
Cash Markets
--CIF Corn off 1 to 4. LH Nov. +40 to +45, Dec. +46 to +49, Jan. +48 to +50, Feb. +51 to +54, Mar. +51 to +53, A/M +41 to +43 J/J +42 to +45
TREND:
Chi wheat still refuses to break. This market will take time, but suspect there is not a big rally in new crop. There can be more rally in the old crop as the trade comes to the realization that bin bottoms have to be swept to get the carry out down to where we need to get.
Corn price weakness continued today making the reversal meaningful. Even though the market closed near the highs for the day, it still left the trade of the last two days behind. Trade tomorrow will be important as to direction for the next move. Deliveries are out on Thur night. Current cash values are 12 to 15 cents below delivery equivalent. This did not lead to big bean deliveries vs. the SX but it may be different in corn?
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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