Linn Group Morning Corn Comment
CHICAGO - Jul 30/10 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.
The corn market was higher again on Thursday as wheat continues to pull it higher and demand is expected to be strong in the future. The December contract closed up about 3 cents which was about 5 cents off the highs, but still stronger. The wheat market is still the main driver behind the rally in corn as the drought in Russia and eastern Europe is getting all the attention across the world and in the mainstream media. The lack of wheat out of these areas is pushing corn futures higher as an alternative. It seems like we have been talking about this for the last couple of days, but that is the reason for the rally. The weekly export sales were also supportive and probably helped give corn that extra push on the opening that push corn 8-9 higher in the beginning of the day. While the corn crop conditions remain excellent, traders don't care and are finally looking at the world and not just the US. We have passed the most critical pollination stage which is preventing some traders from really buying the corn, but the continued move higher in wheat is pulling corn higher. The volume was good at 255,000 and funds were buyers of about 6,000 contracts. Overnight, the corn market closed higher again as wheat was higher and dragged corn higher. The corn market closed about 2-3 cents higher which was near the highs of the session. There isn't any new news this morning as the wheat is still the topic of conversation and what everybody is talking about and driving corn prices higher. It seems like a broken record, but that is the only news. There were headlines in international papers again today about the drought in Russia and the affect on not only people, but on the crops and animals. This international exposure is causing traders to cover shorts and to buy wheat. Today is also the end of the week and end of the month which could bring about fund activity as they position themselves. The weather remains pretty good across the heart of the Midwest as the warmer temps is accompanied with rains. The southern plains and Delta is going to have extreme heat this weekend and next week, which could have a big affect on animals, but a minimal affect on grains as many are starting harvest. The corn market will be called higher this morning inline with the overnight close, but watch wheat. The outside markets are slightly negative, but those markets have gone largely ignored by the grains lately. Globex Overnight Contract Last Net Change High Low Volume ZCU10 381^6 2^4 382^6 378^2 1814 ZCZ10 396^2 2^4 397^0 393^0 6782 ZCH11 409^4 3^0 410^0 405^6 313 Early Opening Calls: 2-3 cents better Top News -- Official EU data shows 39,000 mt of Barley were granted export licenses. The marketing year to date total is 367,000 mt compared to last year's 145,000 mt at the same point -- Spain's ag ministry now estimates winter grains harvest rising slightly to 15.56 mln mt from the 15.48 mln mt previously expected. -- On Friday, the United Grain Comp, a grain trading firm for the Russian gov't said their plans to export nothing less than 1 mln mt of grain this year is still a target. -- EIA reports May US ethanol production at 1.10 billion gallons, unch from March '10 production, but up 1.7% from April's daily production rate -- EIA reports May US ethanol in storage at 828.3 million gallons, little changed from April and March levels -- Analysts estimate the US ethanol industry consumed 393 million bushels of corn in May, up 26.4% from 2009 levels -- AUGUST 2010 ETHANOL FUTURES 7/29/10 : 0 contracts -- AUGUST 2010 DISTILLERS DRIED GRAIN FUTURES 7/29/10 : 0 contracts -- Pending Tender: 20-25,000 mt of US, Latam, S Africa, or Canadian Corn is being tendered for by Abu Dhabi in a tender that closes today. Shipment for LH Sept to FH Oct -- Pending Tender: Cyprus seeking 60,000 mt of opt origin Barley, with an option for 12,000 mt additional, in a tender that closes on Monday, July 26. Shipment is expected between Sept 15 to Feb 10, 2011 -- Dalian Jan. Corn futures were down -8 @ 1,927 yuan/mt. -- Liffe Aug. Corn futures were up +2.00 @ 185.00 euros/mt., as Nov. was up +3.00 @ 176.00 euros/mt. -- Globex Corn Vol: 235,966; Pit Vol: 11,967; Open Interest change: - 1,855 -- Weather: 6-10 Day Forecast: Above Normal Temps. Normal to Above Precip. -- Outside markets: Energy Complex -0.77 at $77.59; Gold & Silver: +3.7 at $1173.5 & +0.313 at $17.930; US $ +0.041 at $81.795 Cash Markets -- CIF Corn steady. July +27 to +32, Aug. +29 to +35, Sept. +47 to +50, Oct. +48 to +51, Nov. +48 to +52, Dec. +53 to +55, Jan. +41 to +45 TREND: Corn is still under performing but this market is starting to look like it has value to feed demand as alternatives are bid up. Demand is improving but the interest is for 2yc and the supply is mainly something less. There continues a 30 to 40 cent premium for 2yc in both the PNW and the Gulf. Corn loading in the Tex gulf has gotten in the way of a developing wheat program? Continue to look for corn flat price to become more dynamic. Takes a close over 4.00 in CZ to get the trade started again. A close over 4.10 would put in place a move to 4.45. If yields come in less than 165 bpa at year end, corn could make a very hard upside move to ration usage. Note hogs up more than corn and meal today so margins remain good. Not so good for cattle? Look for this market to hold small breaks and 3.80 corn is looking as a distant support level with a lot of users wanting a big break to take on coverage. Usually does not happen that way when every one is waiting for the opportunity? Futures trading involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future trading results. Trading commentary and analysis is based on information taken from trade and statistical services, news services, and other sources which we believe to be reliable. We do NOT warrant that such information is accurate or complete, and it should NOT be relied upon as such. Our policy is to publish market research that is objective, clear, fair, and not misleading. Trading commentary and analysis reflects our good faith judgment at a specific time and is subject to change without notice. There is no assurance that the advice we give will result in profitable trades. All trading decisions will be made on a strictly unsolicited basis by the account holder. If you have any questions or want to discuss specific trade recommendations, contact me directly. Jim Riley Linn Group 877-787-6278 jriley@linngroup.com www.linngroup.com/
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