The corn market sold off late in the day and closed down near the lows after the wheat market sold off. The March contract closed almost 4 cents lower as the wheat market sold off significantly from the highs when wheat traded limit up earlier in the session. There is very little reason for corn to rally this time of the year and there has been very little news. The weekly export sales this morning were big, but within the estimated range and were probably neutral. The crude oil which was much higher early in the day sold off and the US$ was much stronger, bot h are negative the corn market. Traders also pointed to First Notice Day as a reason for the sell off in corn market as traders liquidated positions. Demand still remains excellent but there is plenty of corn available. Some talk of drier weather in Argentina, but it is still very early in the growing season and as we have seen, today's seeds can bounce back from adversity and still perform.
eCBOT market was lower overnight as we saw a general sell off in the grain markets and the outside market on top of deliveries. The crude oil is down significantly this morning trading below $90 for the first time in about a month. No real news out in corn this morning, deliveries were heavy, but that was expected and that will put some pressure on the futures markets. The market was expecting 1,000 - 2,000 and got 3,400+, so it was bigger, but it shouldn't have more than a temporary affect on the market. Today is also the end of the month, so we will see some liquidation and possible redistribution of money's into and out of different commodities. This could produce some added volatility. Corn is a follower, not a leader, so it will look at the crude, soy, and wheat for direction and right now, those markets are lower. Corn should open inline with the closes last night and look for direction, especially with crude oil making its lows in the last 30 min. Talking to traders this morning, there seems to be a negative sentiment around, but a lot of guys are looking to buy lower markets. Nothing has changed in the corn market, demand is still good and there is a huge US crop.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 381^6 -1^6 383^4 380^6
ZCH8 398^4 -2^2 400^2 398^0
ZCK8 409^6 -1^6 411^2 408^6
ZCN8 417^2 -2^6 419^4 417^2
Early Opening Calls: 2 to 3c lower
Top News
-- EU Corn import licenses during the latest week total 380k mt & marketing year import licenses total 6.8 mln mt vs. 1.9 mln mt in same time frame a year ago
-- CBOT Dec Corn Deliveries: 3,403
-- Dalian Corn futures off 18 Yuan to 1756 Yuan/mt basis the May futures.
-- eCBOT Corn Vol: 171,135; Pit Vol.: 77,040; Open Interest change: +3,015
-- Weather: 6-10 Day Forecast: Normal to Above Temps West, Below East. Below Normal Precip. The Corn Belt looks dry today. Saturday and Sunday will see showers and snow.
-- Outside markets. Energy: crude off $1.88 to $89.13/bbl, products sharply lower also ; Gold off $2.9 to $799.60/oz& Silver: off 11c; US $ on the rebound against the Euro, but off against the yen
Cash Markets
-- CIF Corn steady up 2. Dec. +50 to +54, LH Dec. +55 to ??, Jan. +47 to +48, Feb. +52 to +54, Mar. +51 to +54, A/M +40 to +44 J/J +42 to +45
TREND:
Wheat market settled well off their highs and tomorrow should see 9.00 as a bit more of a resistance barrier. It is end of the month, and with the huge run up we have seen over the past two weeks, anything goes.
Corn prices seemed to have had many opportunities to extend today's rally but did not. Look for weak trade tomorrow, and rallies to be met with modest selling scale up. I continue to look for a deeper correction but will have to take note if last weeks highs come out. Would be a buyer on a 15-cent break.
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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