December corn was down 11 1/4 cents late in the overnight session. Outside market forces look bearish this morning with a strong US dollar and weakness in energy and equity markets. The Purchasing Managers Index number from China this morning was down to its lowest level in almost three years. This has raised concerns that the debt issues in Europe and the US could spread to China and the rest of the world and that it could slow down global growth. The dollar jumped to a six week high, and while domestic cash markets for corn remain strong, traders are concerned about the export market, with increasing supply coming from Ukraine now and expected to come from Argentina in the spring. December corn closed higher yesterday, with an inside day in relatively quiet trade. Talk of a strong seasonal tenedncy for grains to move higher on the session before Thanksgiving plus talk of the oversold condition after the recent break lent support. However, as of November 15th non-commercial traders (funds) still held a sizable net long position of 220,608 contracts. While the stock market was lower yesterday, firm trade for gold and energy plus more talk that corn is cheap enough to attract increased demand lent support. With the options expiration this coming Friday, the market was attempting to hover near the 600 strike price yesterday. But the 590 and 580 strikes may be in play today. A rally in metal and energy markets helped provide some support early in the session yesterday, but renewed weakness in the stock market into the mid-session sparked more selling. Fears that the debt situation in Europe and the US could lead to a weaker global economic outlook continues to offer selling pressure. Those fears seemed to increase again overnight. The selling was absorbed yesterday by more and more traders seeing very strong domestic demand due to the recent lower prices and from the firm tone in the cash market due to a lack of near-term selling by producers. Traders see a strong weekly ethanol production number for today, but reducing risk might be the theme for many commodity markets.
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