CBOT Corn Outlook: Corn Seen Following Wheat To Firmer Levels

ODJ CBOT Corn Outlook: Corn Seen Following Wheat To Firmer Levels
By Tanner Ehmke

Chicago, Dec. 17 (OsterDowJones) - Chicago Board of Trade corn futures
are expected to open steady to 1/2 cent a bushel higher Wednesday, in tandem
with the wheat market which is expected to climb higher on fresh sales to
Egypt.

"We'll probably gain a little strength from the wheat," a CBOT grain
trader said.

Otherwise, overall fundamental news to move the market was considered thin
and scarce. Carryover selling from Tuesday's session and the large commission
house long position could limit upside momentum.

On Tuesday, prices settled lower in dull trading as corn followed
soybeans to lower levels into the close after spending the day on the
defensive. The heavy fund long position of 116,568 tallied last week should
also help keep a lid on any rallies, sources said.

In other news, the price of corn in China made another advance after
Beijing raised rail transportation charges for some goods earlier this
week due to a tight transit picture. Higher transportation costs have raised
corn prices at a time when exporters are struggling to move more corn to
ports.

Thailand has approved 54,700 metric tons of corn imports and unlimited
soymeal imports for 2004, the government said Wednesday. The corn imports
will be subject to a 20% tariff.

Weather-wise, extreme northern regions of Argentina had decent showers
Tuesday, dumping 1.50 to 4.75 inches. Clear skies and pleasant temperatures
arrived by midday, Global Weather Services reported. Forecasts call for
mostly dry weather for Argentina through the weekend, with the north seeing
scattered showers. The dry weather will permit farmers there to continue
planting the new corn crop, which is more than two-thirds complete. The main
crop belt will have a chance for light, scattered showers Sunday with
precipitation expected to be less than 0.35 to 1.50 inches.

Corn breaking into new higs .. I am going long to run with my Soybean long position aswell.

Peter

Interesting comment from Merills today. I quote
"COULD COMMODITIES COLLAPSE LIKE 1988? Many US$ denominated commodity markets have moved to their most overbought positions since December 1987. This has virtually reflected the most oversold US$ trend momentum positions also since December 1987. With the extreme leveraged positioning in the US$ denominated commodities, even a slight US$ bullish reversal could trigger accelerated commodity losses. "

twalker I agree they are looking overbought just by looking at the charts, however I have to say that so long as the trend is up I will buy them. If (or inevitably when) they start a strong pullback I would like to be square. In the short term thought, i can only bring myself to buy them with close stops that I ramp up as the price moves up.

Would not disagree with you. Just thought the information would be of interest.
Seems that an awful lot hangs on the short term dollar direction however. Very good idea to keep eyes on FX markets right now.
With the FOMC apparently now on hold, the attention of global capital markets has shifted towards renewed US$ weakness. Within this environment there are 3 major trading themes: 1. Major US$ short exposure. 2. Long fixed income yield curve carry positions and general outright long exposure. 3. Long US$ denominated commodities. These trading themes are very dependant upon artificially low US short end yields and extreme US$ deterioration. IN addition, over the last 6 months these trading themes have lifted many futures Open Interest levels to historical highs, This has established the most leveraged environment since 1998. The difficulty of the Fed will be extracting global capital markets from this very dangerous leveraged environment. A reversal of low US short end yields or accelerated US$ deterioration would likely trigger aggressive forced liquidation of the dominant 3 capital market positions.

Also 4. Long any stock market the benefits from the asset reflation environment ... eg Asia (especiallly USD pegged currency countries) and 5. Long property ... as you say its difficult to envisage a nice soft landing for any of these markets

Peter