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NEAR-TERM MARKET FUNDAMENTALS: The cash market may have been the major influence in futures yesterday and traders are bracing for this to possibly be the case again today. Farmers stepped up their selling across the Midwest yesterday as the nearby futures contract and some local cash prices approached $4. This also brought pressure to the Gulf where basis levels for April declined by 2-3 cents. Funds were strong buyers yesterday, at least through late morning, and this follows last week’s Commitments of Traders Report which showed massive short covering by trend-following funds. Traders say that the grain markets are still following the stock market and that ideas of a possible bounce in the economy are still considered a supportive factor. However, one analyst pointed out that farmers still hold a large amount of old crop corn and that the approach of planting season in the US could generate sustained selling near $4. The US agricultural attache in Mexico says that total grain production there is expected to increase slightly for 2009/10 even though corn production is expected to decrease three percent. This, in turn, is expected to bump corn imports to 7.7 million tonnes versus 7.5 million in 2008/09. The state feed import agency in Iran is tendering for 110,000 tonnes of corn. Weather is not considered a significant factor in the corn market world wide although warmer temperatures and generally drier conditions in much of the Midwest have alleviated some of the premature concerns over wet fields there.

WEATHER: Weather has generally been drier across the Midwest since the weekend and this is expected to continue into mid week.

TODAY’S GUIDANCE: Increased farmer selling hit corn prices yesterday and this reinforced what cash sources had predicted. Namely that many farmers planned to hold onto supplies until the nearby futures or local cash price reached $4. Funds were buyers yesterday. The question now is whether farmer selling will be sustained near $4, or whether fund buying can outweigh the farmer factor. Support in the May contract is at 381 with additional support near 370. Resistance is at 400 to 401.

This content originated from – The Hightower Report.
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