The corn market closed slightly higher on Monday after being unable to take advantage of early gains and push the corn market higher. The March contract closed ½ higher and the corn market only had a 4 cent trading range. Traders pointed to the early gains coming off technical buying and the gains in the wheat. Wheat almost traded limit up early in the session before settling back off the highs, but still up 8 cents on the day. Traders yesterday said the lack of new news and the release of the USDA supply/demand report were part of the reason that corn consolidated late in the session. They also said that wheat closing almost 20 cents off the highs contributed to corn being unable to extend the early gains. Weekly import inspections were lower than expected at 38.426, vs. last weeks inspections of 56.658 and the estimate of 50-55 mil bu. One trade said he thought the corn market seemed to just run out of steam yesterday as traders waited for the USDA report and there wasn't any news. China sold only about ½ of the expected corn out of reserves as traders said many users feel that prices are going to decline and they may be waiting for the lower prices. Argentine weather also remains supportive of corn prices as rains remain scattered without wide coverage and forecasters see a dryer weather pattern developing.
eCBOT market was down a little overnight on light trading as traders awaited the release of the USDA report this morning. The average analysts estimate for corn ending stocks was 1.879 vs. November estimate of 1.897 and the actual number was 1.797. This was lower than expected so it should be supportive of the corn market, but remember, the market has been talking about a lower number for the last week, so this could be the time we see buy the rumor, sell the fact. The corn market should open higher, but will we see buying on a higher market or profit taking. Corn is still considered a follower in the grain complex, so it will look to the other markets for direction. Outside markets will be quiet today as everybody awaits the decision by the Federal Reserve on a rate cut, with most expecting a ¼ pt rate reduction. The corn, beans, and wheat will all be called higher this morning and it will be key to see if they can extend gains or if the recent run up will met with profit taking today on a higher opening. Now that the USDA report is out of the way, we will start to hear more talk about So. American weather and fund re-allocation.
eCBOT Overnight
Contract Last Net Change High Low
ZCZ7 400^0 -0^4 400^0 399^2
ZCH8 417^0 -0^6 417^6 416^2
ZCK8 427^2 -0^6 428^0 426^4
ZCN8 435^0 -0^2 435^2 434^0
Opening Calls: 3-5 higher - post report
Top News
**US Dec Corn 07/08 Carryout: 1.797 bln bu. ; est. 1.88; Nov Rpt 1.897
**US Dec Corn 07/08 Crop Prod: 13.168 bln bu.
**World 07/08 Corn Carryout: 109.1 mmt; Nov Rpt 110.39
**Dec China 07/08 Corn Output: 145.0 mmt; Nov Rpt 145.0
**Dec S Africa 07/08 Corn Output: 10.00 mmt; Nov Rpt 10.5
**Dec Argentina 07/08 Corn Output: 22.5 mmt; Nov Rpt 22.5
-- Only 238,000 mt of Corn was bought by Chinese feed mills in Tuesday auction held by China's state grain reserves, prices ranged between 1760-1850 Yuan/mt. Up to 500,000 mt of Corn was offered from state reserves
-- Monday's USDA Corn Export Inspections: 38.426 mln bu; expected 53.0 mln bu
-- Dalian Corn futures were 6 Yuan higher at 1743 Yuan/mt basis the May contract, rest of complex was higher
-- eCBOT Corn Vol: 123,174; Pit Vol.: 29,119; Open Interest change: +9,396
-- Weather: 6-10 Day Forecast: Above Normal Temps. Below Normal Precip. The Corn Belt will see periods of rains and snow today into Thursday.
-- Outside markets. Energy +.88 at $88.75 ; Gold & Silver: -2.6 at $805 & up slightly at $14.7; US $ is trading higher vs. the Yen , steady vs. the Euro.
Cash Markets
-- CIF Corn steady. Dec. +?? to +34, LH Dec. +36 to +38,, Jan. +44 to +46, Feb. +50 to +53, Mar. +51 to +53, A/M +40 to
+42 J/J +40 to +42
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.
