April 10, 2007

 

CBOT Corn Review on Monday: Lower; fails to hold early price strength

 

 

Chicago Board of Trade corn futures ended lower Monday, limping into the close, unable to generate follow-through buying on early price strength.

 

May corn settled 2 1/2 cents lower at US$3.63 1/2, and December finished 1/4 cent lower at US$3.86 1/2.

 

The session's activity was disappointing to market bulls, as cool, wet weather forecasts provided an early spark but failed to attract follow-through buying, said Shawn McCambridge, senior gains analyst with Prudential Financial in Chicago.

 

Position-squaring ahead of Tuesday's supply and demand report and ideas it may be too early to write off some corn plantings due to current weather forecasts were seen as bearish features to aid the price retreat, traders said.

 

Meanwhile, general sentiment that demand isn't meeting U.S. Department of Agriculture expectations raised some usage concerns heading into the supply and demand report, particularly with Monday's export inspection figure, McCambridge added.

 

Export inspections of U.S. corn were 25.488 million bushels for the week ended April 5, the USDA reported. The inspections were 26.8% lower than the 34.796 million bushels inspected the prior week, and below the 33 million to 38 million bushels expected by analysts. Year-to-date 1.269 billion bushels have been inspected for export, up 12.7% from the 1.126 billion inspected last year at the same time.

 

The market initially soared to double digit gains, but once the early orders were absorbed, selling pressure surfaced, a CBOT pit trader said. The December future held up better against nearby contracts amid weather concerns, but without speculative buying support, futures stumbled into the close on a lack of risk takers ahead of a report and sharply lower crude oil prices, he added.

 

Technically, futures managed to back fill into chart gaps left from prior limit down moves, but after satisfying that objective, the market had little strength to maintain its upward push, a trader added. The DTN Meteorlogix forecast calls for a slow warm-up in temperatures to near normal for the season. Soil temperatures will be very slow to respond following a recent decline into the 20s and 30s Fahrenheit across much of the Corn Belt.

 

Light rain showers, with moisture of up to a half inch, will develop Monday night and Tuesday in the Midwest. A second and more potent rain system will move across the region during the last half of the week. This system promises to bring up to 1 1/2 inches of rain to an area from central Iowa east to Ohio. Field work progress across much of the highest-producing corn acreage in the Midwest will again be stymied. Delays in field work and corn planting are notable in contrast to the recent trend of early corn planting, Meteorlogix reports.

 

In pit trades, JP Morgan bought 300 may and 1,000 December, FCStonnee bought 300 July. Iowa Grain sold 1,000 July, UBS Securities sold 700 July, FCStonnee and Man Financial each sold 500 December, JP Morgan sold 500 July, and RJ O'Brien sold 300 December.

 

CBOT oats ended higher on light commission house buying after a day of lackluster activity, traders said. May oats were up 1 1/2 cents at US$2.78 per bushel, and July oats were 1 1/2 cents higher at US$2.84 1/2.

 

CBOT May ethanol rose US$0.026 to US$2.126 per gallon, while July ethanol rose US$0.015 to US$2.09.