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NEAR-TERM MARKET FUNDAMENTALS: The corn market saw a lower open yesterday and a modest rally into mid session. Traders said that price action came in sympathy with soybeans and wheat. However, fund selling over the course of the day helped to push prices lower from late morning into early afternoon and the market finished near the lows of the day. Prices were fractionally lower overnight in a very narrow range. Traders indicate that corn will continue to follow weather forecasts in Argentina although the corn crop is well advanced at this point. Neighboring Brazil has seen some improvement in its corn crop in the key growing sate of Parana in recent weeks and this is expected to take up some of the slack left by an expected reduction in Argentine corn exports. In fact, the USDA pointed out on Tuesday that Brazil should surpass Argentina during 2008/09 to become the world’s second largest corn exporter after the US. A group of private South Korean feed makers bought 165,000 tonnes of corn today, continuing the recent upsurge in corn demand from that country. Corn prices in China have been firm this week with sources there indicating that this is due to the aggressive buying by the national government to fill a 30 million tonnes strategic reserve. China also announced this week that it would push for private companies and local government to also increase inventories. The USDA will issue its latest Export Sales Report this morning. Traders have mixed ideas about the amount. Sales have surpassed the 1 million tonne market for three straight weeks.

CASH NEWS AND TENDERS: A group of private South Korean feed makers bought 165,000 tonnes of corn today.

WEATHER: Forecasts for Argentina mostly call for a resumption of drier and hotter weather. This is expected to last for the next 5-7 days. Brazil saw some rain in northern areas of the state of Rio Grande do Sul over the past 24 hours but little rain is expected there today and tomorrow.

TODAY’S GUIDANCE: In recent months, a narrowing of ranges has often preceded a renewed push to the downside, and that may be the case again in corn as we come to the end of another week. Improved export demand has helped push the Gulf basis higher over the past month, but we have now pulled back from last week’s high which suggests that farmer selling is rising at a pace that is allowing the market to meet the increased demand. With economic pessimism on the rise this week, farmer selling may start to accelerate, even in a down market. Funds have also been willing sellers at lower levels of late and this suggests that trend-following funds may be interested in continuing to add to their already large net short position. Eventually this will result in a very oversold market, but that could take several weeks and lower prices.

This content originated from – The Hightower Report.
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