The corn market consolidated yesterday some as it was probably oversold after the limit down day on Tuesday and we had fund buying yesterday as the index funds were prohibited from buying on the limit down day on Tuesday. The December contract closed up about 2 cents after making the highs early in the session and selling off in the middle of the day and then rallying on fund buying. The soybean market was strong on the opening and helped pull the corn market higher early in the session, but it just couldn’t the gains. The outside markets were supportive early with crude higher and the US$ lower, but crude faded later in the day with the corn market. With the corn market probably oversold after the limit down move, it was due for a bounce, but the upside is limited because of the much higher acreage number, the excellent weather conditions, and the weak domestic feed demand. There was also talk in the market that China would release corn from its reserves possibly next week to ease prices in the northern China as prices have gotten tight. The funds were net short on the day, but that was mostly because we saw significant index fund buying on the close as they couldn’t buy corn on Tuesday. The volume was strong at 320,000 contracts.
Overnight, corn traded mostly lower overnight closing down about 6 cents near the lows of the night session. There is nothing positive about corn right now and the market knows it and it will sell any rally until something changes. The weekly export sales this morning were good, but as we have seen, weekly export sales have gone largely ignored. There is no new news on the corn market right now, so traders/analysts will look at old information for trading guidance. Almost all the news is negative for corn right now as bulls hold on to the hope of weather stress later this summer during pollination will reduce yields. A producers worst nightmare is high yields on top of bigger acres. The 87 mil acres is probably too big, but it is now the base line for acreage discussions the rest of the summer and will probably go lower, but probably not 3-4 mil acres taking acres down to a reasonable number to keep prices higher. The weather is the main focus for traders now that the crop report is behind us. We have a 3 day weekend and we could see some further selling today as the weather pattern looks non threatening. Corn will be called lower this morning, the outside markets are negative, but if soybeans gain some strength, it could pull corn higher.
eCBOT Overnight
Contract Last Net Change High Low Volume
ZCN9 345^4 -6^2 352^4 345^2 308 ZCU9 350^0 -6^4 357^0 349^6 2698 ZCZ9 363^4 -5^6 369^6 362^4 5759 ZCH10 377^6 -4^6 383^0 376^4 455
Early Opening Calls: 3-4 lower
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Cash Markets
-- CIF Corn steady. July +44 to +46, LH July +46 to +48, Aug. +50 to +53, Sept. +58 to +61, Oct. +49 to +51, Nov. +50 to +52, Dec. +52 to +57, Jan. +42 to +??
TREND:
Corn and wheat have definitely damaged the outlook---so let’s start from scratch.
Corn rallies will be limited. The down side may not be done. Weekly chart says we could take the market all the way to $3.00. Use weather related rallies to step up marketing for producers. Users have to do what is economical. Scaled down buying if needed---but should get lots of chances. New crop spreads will tend to remain under pressure but not sure that there is enough to be bear spread unless we get a correction due to weather?
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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