Jim Riley : Corn Update

Jim Riley
Linn Group
877-787-6278
jriley@linngroup.com

Jim Riley : Corn Update

The corn market closed lower on Friday as the fundamentals remain negative and further technical pressure with new lows.  The March and December contracts closed down about 3 cents which was off the lows as we saw some profit taking in the last 5-10 min after making new lows in the final 45 min.  The outside markets also pressured the grains with crude and stocks lower and the US$ higher.  Support corn is coming from the lack of farmer selling and possible index fund rebalancing.  We will get an updated supply/demand report on Tuesday which should make any major changes as this is usually a very minor report.  The crops in Brazil and Argentina continue to get bigger which should keep pressure on corn and will probably show up in the selling of rally’s.  The market is also expecting the USDA to increase the estimate for Brazil and Argentina production in the report on Tuesday.  With the lack of new news, the grain markets are looking to the outside markets for direction, especially with crude and US$ because they are highly correlated with the corn markets.  The volume remains good at 322,000 contracts and funds were sellers of about 10,000 contracts. 

Overnight, the corn market opened higher and stayed higher closing up about 4 cents.  There isn’t a lot of news out this morning and the outside market are a little positive after the much lower moves last week.  The grain market will probably see some profit taking today with the USDA report tomorrow even though nobody is expecting any big changes.  Nothing has really changed with the corn market and I would expect any buying to be met with selling pressure as the fundamentals are negative and not expected to get any better anytime soon.  Traders/analysts also expect to see some farmer selling in the coming weeks or months as the weather gets warmer and the farmer has corn stored on the farm that is not the best quality and has high moisture levels.  The corn market will be called to open 3-4 higher this morning inline with the closes last night and we could see some continued buying as traders move to the side with the USDA report tomorrow morning.  There should be active selling on a higher corn trade, but it might be muted until we get the report tomorrow morning. 

Early Opening Calls: 2-4 cents better

Globex Overnight

Contract            Last      Net Change       High      Low      Volume
ZCH10              355^6    4^2                   356^6    353^4    6129
ZCK10              366^6    3^6                   368^0    365^2    3682
ZCN10              377^2    4^2                   378^2    375^2    2615
ZCU10              383^4    3^2                   385^0    382^4    666

Top News

• Of the 1.0 billion announced by USDA Ag Sec Vilsack late last week, half would be for the biomass crop assistance and most of the balance would go towards underwriting biofuel refineries or retrofitting current plants
• Deputy Prime Minister in Russia suggested the country needs to export 20 mln mt of grain in the 09/10 crop year
• Early poll of grain analysts for next Tuesday's USDA crop data, shows 09/10 Corn ending stocks at 1.73 mln bu down from January's 1.764 mln.
• Early poll of grain analysts for next Tuesday's USDA crop data, shows 09/10 Soybean ending stocks at 216 mln bu down from January's 245 mln.
• Pending Tender: CCC launches Feb 10 tender deadline for 103,960 mt of US Sorghum for donation to Ethiopia and Sudan
• Pending Tender: In a tender scheduled for February 19th, Japan's Ag Ministry is seeking 41,000 mt of food grade Barley under SBS tender rules, acc. to officials at the ministry
• Sep Dalian Corn futures gained 3 yuan to settle at 1,850 yuan/mt
• Liffe Mar corn futures were unchanged at 132.50 euros/mt.
• Globex Corn Vol: 276,088; Pit Vol.: 39,930; Open Interest change: - 2,580
• Weather: 6 - 10 Day Forecast: Normal to Below Temps. Normal to Below Precip.
• Outside markets: Energy Complex +0.14 at $71.33; Gold & Silver: +12.5 at $1065.3 & +0.160 at $14.990; US $ -0.160 at $80.435

Cash Markets

-- CIF Corn steady up 1:  FH Feb. +52 to +54, Feb. +51 to +53, Mar. +50 to +52, April +39 to +41, May +41 to +45,\ June +38 to +40, July +41 to +44, Oct. +40 to +43

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