Jim Riley: Daily Corn Updates.

Jim Riley
linngroup.com
jriley@linngroup.com

The corn market rallied on Tuesday as we had the magical turn around Tuesday.  The July contract closed up about 14 cents and the December were up about 9 cents both near the highs of the session.  The corn market started higher, trading as much as 8 higher before settling back, trading down to around unchanged.  After that initial break, the corn market moved higher again trading out as much as 15 higher in the July and about 10 higher in the December.  The rally in corn was led by the bull spreads again which maybe exaggerates the rally.  The corn market settled into a range trade the rest of the session, but it did make new highs into the close.  The planting progress would seem to keep a lid on rally’s, but the recent break since the USDA report last week was relentless and this rally was probably profit taking as much as anything.  The outside markets were negative, especially the US$, but the grain markets seemed to shake off the negative sentiment.  There wasn’t a lot of news out about the grains, but the outside markets seemed to be stuck on the situation in Europe.  The volume remains on the light side at 212,000 contracts and funds were buyers of about 10,000.

The overnight market gave back a little of the gains yesterday, but still only closed down about 3 cents which was about the middle of the trading range.  There isn’t a lot of news out this morning as the market digests all the data.  We do have the export sales report tomorrow morning and there are some that are expecting to see good sales this week since we didn’t see some of the sales in the report last week.  The USDA did report this morning big corn sales to China.  First there was 660,000 mt that was previously classified as unknown, 180,000 mt for 11/12 and 480,000 mt for 12/13.  The second was 900,000 mt to China, 180,000 mt for 11/12 and 720,000 mt for 12/13.  Interesting that the bulk of the sales are for new crop which has been what they have been buying lately.  It should put a damper on the bull spreads again as traders have been betting that somebody is going to be here to buy the tight old crop.   It will be interesting to see how corn reacts to the export sales announcements this morning.  The outside markets and world economies are negative which is weighing on the commodity markets in general, but China buying new crop corn is important, especially if we don’t get the big crop the market is expecting.  The corn market will still be called to open lower, but maybe not as much as it closed overnight.     

GLOBEX Overnight
Contract     Last    Net Change   High     Low     Volume
ZCN12      594^4      -2^6           598^4   590^6    7794
ZCU12      519^6      -3^2           523^0   516^4    1635
ZCZ12       511^0      -3^4           515^0   507^2    5653
ZCH13       521^6     -4^6            525^6   520^0   1305

LaSalle Street News Early Opening Calls:

LaSalle Street News Top News
-- Japan's gov't announced they're seeking 200,000 mt of feed barley and 120,000 mt of feed wheat in a May 23rd SBS tender
-- Grain traders said Marubeni sold 60,000 mt of optional origin feed Corn to S Korea's FLC group for a reported $259.50/mt cif
-- China's Nat'l Grain & Oils Center today released a report forecasting 2012's Corn crop production at record 197.5 mln mt, that's 3% higher than last year's crop.  Acreage was forecast to rise to 34.3 mln ha up +2.6%
-- Private analyst group in Russia estimated 1.3 mln mt of grain exported in April unchanged from the prior month, they noted exports to Turkey rose but were offset by reduced exports to Egypt
-- Indonesia grain millers say the gov't has again begun issuing Corn import permits after halting for 2 months, local supplies have dwindled, but a 200,000 mt India corn shipment is to arrive in the next couple weeks
-- Chicago Fed regional report on agriculture shows farmland prices from the region rose 19% in the 1Q 2012 from year ago quarter, but only rose 5% from the final quarter of 2011
-- Pending Tender:  Japan's Ag Ministry announced 120,000 mt feed Wheat and 200,000 mt feed barley tender to end on May 16th, the grain in that tender should be delivered by Aug 31
-- Pending Tender:  Cash grain traders say May 17th is tender deadline for 23,000 mt of US Corn sought by Taiwan Sugar Corp, shipment is expected between June 11 to July 10
-- Pending Tender:  Japanese gov't official announced a 30,000 mt SBS food wheat tender to end on May 25, they're also seeking 52,000 mt of barley in that SBS tender
-- Dalian Sept Corn futures traded -3 yuan lower Wednesday ending the session at 2,385 yuan/mt
-- CBOT Corn Volume & Open Interest for May 15th 2012 was 212,802; Open interest decreased -3,685 to 1,235,154.
-- CBOT Ethanol Volume & Open Interest for May 15th 2012 was 1,232; Open Interest increased +78 to 12,787.
-- Weather: 6- 10 Day Forecast: Above Normal Temps. Normal to Below Precip West, Above East
-- Outside markets. Crude Oil off -$1.03 @ $92.95; Gold -$17.50 @ $1539.40 ; Silver off -59 @ $27.48 ; US $ index up +2 pts 81.41

LaSalle Street News Cash Markets
-- CIF Corn steady up 3.  May +85 to +87, June +82 to +87, July +70 to +75, FH Aug. +105 to +??, Sept. +65 to +70, OND +68 to +70

TREND:

July corn went right to resistance 6.00. Part of the problem was a lack of resting sell order so buying moved the market further than it might have in other times? Takes a close on Friday over 6.08 to take away the negative look of the weekly charts?  The N/Z spread was stronger in reaction to the barge basis. Interesting the new crop could not resurrect much of a rally at all? May have been the stepped up farmer selling there in reaction to crops in the ground and growing. Typical.