The corn market closed slightly higher after seeing selling early in the session on really consolidation trade and disappointing export sales. Corn has underlying support and was able to recover from early weakness, especially after the crude market rallied to close $2.74 higher. Export sales were 1.059 mil vs. the estimate of 1.1 to 1.5 mil. Some traders said they were disappointing, but it was still a strong sales number. Traders are also starting to look toward Argentina to see if they are getting any rain. Argentina is the #2 exporter of corn behind the US and they are experiencing dry weather. It is still very early, but the size of the So. American crop will determine how big of a price war we have between corn and beans for acres. The funds were about even on the day as the corn market saw light/moderate volume. There is very little news out on the corn market, so corn will look to the outside markets, especially the crude oil and wheat markets. Traders will also look to any export sales overnight for positive direction.
eCBOT market was higher overnight continuing the rally that started later in the session on Thursday. There wasn't a lot of news out overnight, but exports are lending support with South Korea seeking 220,000 tones of non-GMO optional-origin corn. As the Europeans have found out, it is getting increasing difficult to find non-GMO grains, even out of So. America. Traders are looking for a decline in U.S. 2007/08 ending corn stocks ahead of Tuesday's USDA supply/demand report. This should be supportive of the corn market. China is selling corn and wheat into the domestic Chinese market in an attempt to tame food-led inflation, a bullish factor for U.S. corn futures. This move by China to sell corn into the domestic market has been widely anticipated and it finally happened last night with China selling 500,000 tones into their domestic market. This will be considered bullish by traders. We look for the corn market to open higher this morning and then look for direction. All the grain markets were higher overnight, but the energy markets are lower. A much higher (5-10) corn market today will probably be met with some selling as the market still isn't ready to buy strength, but the funds are always the wild card. This week, corn seems to have found its trend for the rest of the day around 11-11:30 in the morning and carried through to the close.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 396^4 1^6 397^0 394^4
ZCH8 414^4 2^4 415^0 411^6
ZCK8 424^6 2^2 425^2 422^2
ZCN8 432^2 1^4 433^0 430^2
Early Opening Calls: 2-3 higher
Top News
-- 220,000 mt of Non GMO Corn sought in S Korea tender for Mar & April delivery, acc. to those familiar with grain trade
-- Dec 11 is date set for China to sell 500,000 mt of Corn from its state reserves in a bid to lower domestic price inflation potential, acc. to the Chinese government's Nat'l Grain & Oil trade center
-- Harvest of Ukraine grains in 2007 expected at 29 mln mt down from 34.25 mln mt in 2006, acc. to ag official in the Ukraine
-- Dalian May Corn futures settled 11 Yuan lower to 1735 Yuan/mt in overnight trade, other contract months were 4 to 12 Yuan lower also
-- eCBOT Corn Vol: 94,008; Pit Vol.: 27,391; Open Interest change: +5,908
-- Outside markets. Energy -.05 at $90.15; Gold & Silver: -.05 at $800 & steady at $14.45; US $ up slightly vs. Yen and down slightly vs. Euro
Cash Markets
Bean Barge Corn Barge SRW Barge HRW Track Ill Riv Frt
Dec +40/45 F +30/32 H +30/35 H +??/75 Z 390
Jan +51/55 F +42/45 H +40/55 H +70/80 H 400
Feb +40/44 H +49/51 H +50/60 H +75/85 H 425
Truck Beans Corn Wheat Meal Hi-pro Oil
Chicago -25 F -4 H -35 H
Toledo -46 F -14 H -28 H
Dec ILL -20 F -6 H -8 F -225 F
TREND:
The KC/Chi spreads in new crop got down to 20 cents and lower during the early trade today. We saw this area as support on this relationship and were able to execute orders at that level. Still looking for a test long term of 60 to 70 cents.
No change in my ideas about corn. This market is very methodical and continues unabated in this move to the top side. We are seeing more farmer selling and a curtailment of some demand so that we are due a correction---but the counts imply a move to 4.21 on this leg?
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.
