The corn market was lower on Friday as the weather warms up, profit taking ahead of the USDA report on Wednesday and supportive outside markets. The July and December contracts closed down about 7 cents right on the lows of the day as corn made new lows in the final 15-20 min of trading. The weather is warming up across the Midwest which is helping to melt the snow pack and allow the ground to get uncovered so the ground can get ready to plant. This warmer weather will start the flooding, but as one farmer said to me over the weekend, it is going to happen, so better now than a month from now. The corn market also saw some profit taking after the rally the last couple of weeks and the positive technicals. The outside markets were supportive with crude oil up over $1 and the US$ slightly higher. The corn probably had rallied enough and couldn’t find anybody to keep supporting corn at the higher prices and the path of least resistance was down. The demand for corn remains weak and the market has trouble holding gains. The volume remains decent at 193,000 contracts and funds were funds were sellers of about 6,000 contracts.
Overnight, the corn market was up about 1 cent after a relatively quiet night. The trading range was only about 2-3 cents overnight, so after opening and trading higher, it settled down to trade around unchanged/slightly higher most of the night. Japan was in buying US corn because of the higher freight costs associated with buying corn from Brazil and Argentina. Japan usually buys most of the their corn from the US, but because of quality issues they have gone outside the US. This was a concern, so if the US is gaining back some export sales to Japan that would be considered positive. With the USDA report on Wednesday morning, the corn market probably chops around for the next 2 days as trader’s square positions. The report should probably give us a pretty good final number for the 2009 production and some more indications on supply/demand numbers. A positive report that can’t rally the market could prove to be another nail in the coffin for corn prices. The corn market will be called slightly higher this morning but watch the outside markets for better direction closer to the opening.
Globex Overnight Contract Last Net Change High Low Volume ZCH10 365^4 0^6 367^0 365^0 6098 ZCK10 376^0 0^4 378^2 375^4 4643 ZCN10 387^0 0^4 389^0 386^4 2999 ZCU10 395^6 0^6 397^4 395^4 6895
Early Opening Calls: steady, 1 cent better
Top News -- Argentina’s Rosario Exchange raised their 2009/10 Corn production estimate to 19.7 mln mt up from the previous estimate of 18.0 mln mt -- Ending stocks of US Corn in this week's USDA monthly report shows 1.72 bln bu are expected nearly unchanged from the 1.719 bln bu in the prior month's report -- Scientists have discovered a gene that could potentially lead to aflatoxin-resistant corn -- In testimony before a Senate panel on Wednesday, EPA chief Lisa Jackson said the agency would make a decision by "late summer" on whether to allow an increase in the ethanol blend limit beyond the current 10% -- Ethanol traders expressed disappointment in the EPA statement, as a decision was previously expected in June, representing yet another delay on a verdict -- South Dakota state government has joined Indiana in a push to promote more E-85 retail fuel pumps, by issuing more grants and loan guarantees -- State-owned Petrobras looking to acquire a 40% stake in the new Brenco-ETH Bioenergia merger, as a way to guard against excessive foreign involvement in Brazil's ethanol sector -- Friday Mar 5th tender planned by Taiwan group, they're seeking 60,000 mt of Brazilian or US yellow Corn. The shipment is expected from late Apr/late May depending on location purchased from -- Pending Tender: Mar 19th is date set for Japanese SBS tender, they’re also seeking a total of 11,000 mt of Barley, acc. to ag ministry official. 9,000 mt will be for Barley malting -- Dalian Corn futures gained 7 on Monday to end the session at 1,865 yuan/mt -- Liffe June corn futures were unchanged at 133.50 euros/mt. -- Globex Corn Vol: 175,119; Pit Vol: 15,470; Open Interest change: + 8,449 -- Weather: 6 - 10 Day Forecast: Normal to Above Temps. Normal to Above Precip. -- Outside markets: Energy Complex +0.25 at $81.75; Gold & Silver: -0.5 at $1134.7 & +0.063 at $17.445; US $ -0.170 at $80.290
Cash Markets -- CIF Corn steady off 1. Mar. +36 to +37, April +37 to +40, May +39 to +42, June +36 to +38, July +39 to +42, Oct. +41v to +44, Nov. +41 to +44, Jan. +36 to +38
TREND:
The corn chart had an outside day down today that should start to accelerate the weakness. Should still see a test of 3.60 and could eventually see this market break down to test the 3.25 lows. Corn should continue to gain on wheat
On a final note: The trade this year has been very creative finding reason not to be bearish. First it was disbelief of the big corn and bean yields. Delayed harvest was wrapped around this as well. How could anyone get bearish when China was buying the largest purchases ever out of the US---Yes, from anywhere in the World. How could the markets go down with that type of buying interest?
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