The corn market was very choppy on Wednesday as hurricane Gustav heads toward the gulf coast, pushing energies higher, and rain fell across parts of Nebraska and Iowa. The September and December contracts closed up 2 cents toward the middle of the range and about 10 cents off the lows. The corn market did what it has done the last week or two with the market unable to extend gain and/or sell off. The corn market sold off early in the session but rebounded back to trade back and forth most of the session before rallying at the end of the session to close slightly higher. The weather picture remains the same with some rains, but nothing that is going to give a general rain to some of the driest areas. Because of Gustav, the energy markets are volatile and are helping to support the grain markets without any other news. Traders also said they are starting to see some position squaring with the approaching 3 day weekend. The hurricane will create a lot of uncertainty and may force some further position liquidation so their exposure is limited into what is probably a volatile weekend. The volume on Wednesday wasn’t too bad at 280,000 contracts and funds were about even on the day, maybe slight buyers.
Overnight, the corn market was lower as the market is looking at the rains falling across the western corn belt as really helping some areas that haven’t seen rains over the last month or so. The grain markets are disconnecting from the energy markets as Gustav is keeping a premium in the energy markets until it gets closer to the US and they can determine exactly how big and where it is going to hit. Some traders will tell you that the hurricane is actually bearish the grain markets because it will bring rain up to Midwest after hitting the shore in the gulf. Export sales today were ok, see the details below, but the export sales has been widely ignored in the market place as of late. The corn market is probably going to remain choppy at least through the weekend as the market awaits what is going to happen with the hurricane. The corn market continues to have trouble to extend gains or losses and there doesn’t appear to be anything that is going to break that pattern. The corn market should open in-line with where it closed overnight and then look for direction. It is very tough to trade the grain markets right now.
Globex Overnight
Contract Last Net Change High Low Volume
ZCU8 570^0 -7^4 578^4 568^0 437 ZCZ8 588^4 -7^4 597^4 585^2 3964 ZCH9 605^0 -10^0 616^2 605^0 243 ZCK9 618^0 -9^6 625^6 618^0 4 ZCN9 632^6 -5^0 638^0 632^6 22
Early Opening Calls: 4-6c Lower
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Cash Markets
-- CIF Corn steady off 2 . Aug. +60 to +62, Sept. +55 to +58, Oct. +44 to +46, Nov. +45 to +50, Dec. +52 to +55, Jan. +38 to +41
TREND:
Wheat is now starting to build some down side momentum. Covered shorts today and replaced them with short calls but not sure why. Sell a 20 cent bounce and may get it with the wildly swinging markets but it is no guarantee.
Corn marking time as expected. Should be well supported at 5.70 to 5.60. Take out this weeks highs and this market could move up to 6.50 to 6.90.
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 jriley@linngroup.com
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