The corn market surged higher on Thursday closing up about 20 cents in the old crop and 9 cents in the new crop. It was a very interesting day in corn as early weakness took the bear spreads down to new lows, but rebounded quickly. The wheat market surged about 20 cents higher on the day and corn didn’t really follow, but as the day continued, corn seemed to gain momentum led by the bull spreads. The corn market moved significantly off the lows before settling back and then moving even higher at the end of the day actually making the highs of the session in the modified trading after the close. While the China rumors are still out there, the strength today seemed to come from wheat, bull spreads, and a stronger cash market. The wheat rallied on poorer weather in the plains and when it took off, corn couldn’t be far behind. We heard of narrowing basis levels in different areas of the Midwest, which is unusual in a rallying futures market unless the cash guys are really looking for corn. There were also rumors of Japan looking for new corn sales out of the PNW. The weather also seemed to help prices as it is cold and wet delaying some planting and fieldwork, but it is a little early to get too worried. The volume was good at 389,000 contracts and funds were buyers of 20,000 contracts.
Overnight, the corn market was stronger again setting up a gap opening today in the pit session and probably opens up the market to go after the highs. The old crop closed up about 9 cents while new crop was up only 1-2 cents. The big news this morning is the USDA announcing 1.25mmt of corn sold to unknown destinations. 1.0mmt was old crop and 250,000mt was new crop. This is the China sales confirmation that the market has been looking for from the USDA the last couple of weeks. The corn market today will be an exciting trade with this news and we will probably test the old adage of buy the rumor, sell the fact. The corn market has rallied almost a dollar off the lows on these rumors and now we will see if we can maintain these gains. One veteran trader said he was actually a little disappointed that it wasn’t 2.0mmt instead of 1.0mmt for old crop because that was what he was hearing. The corn market is now called 15-20 higher and I would expect to see the corn market make a run at limit up, could be on the opening. The key today will be how we close, not how we open.
Globex Overnight Contract Last Net Change High Low Volume ZCK11 712^6 10^2 713^0 702^2 17452 ZCN11 717^6 9^6 718^0 707^4 10253 ZCU11 663^0 4^4 663^0 656^6 2150 ZCZ11 621^4 2^6 622^0 615^6 7983
LaSalle Street News Early Opening Calls: 15-20 cents better
LaSalle Street News Top News
-- Dalian Jan. Corn futures were up+13 @ 2,418 yuan/mt.
-- Liffe Jun. Corn futures were up +4.25 @ 226.00 euros/mt
-- Globex Corn Vol: 358,315 ; Pit Vol: 23,475; Open Interest change: - 3,120
-- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Above Precip.
-- Outside markets: Energy Complex +0.04 at $105.64; Gold & Silver: -1.8 at $1433.1 & +0.090 at $37.460; US $ +0.237 at $76.125
LaSalle Street News Cash Markets -- CIF Corn steady up 3. Mar. +53 to +56, Apr. +56 to +59, May +60 to +62, J/J +59 to +64, Aug. +95 to +1.00, Sept. +49 to +55, O/N +55 to +57
TREND: The corn market exploded to the topside as we finally cleared the $7.00 level. This has taken us out of our near term choppy range trade but sustaining these swings has been difficult. However, weekly charts do have room to challenge the $7.35 high if we can hold. A 2nd close over $7.00 would give us that upside potential. At this point, we‘re bit overdone and likely to settle back but this rally is leaving the $6.80 level as support. It looks like the corn market is trying to set up a test of the Feb.-March highs before we cool off. We talked the last time the corn market was up at these levels in the Dec to put option pricing orders for new crop in place. The Dec 600 put vs. Dec 700 call and Dec 500 put settled at 6 to 7 cents. Look to start to buy down side protection when you can do this at 10 profit scaled up at a 5 cent increment to 25 pct of the crop, and try to have some done prior to the report next week.
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