April 22, 2008

 

CBOT Corn Review on Monday: Plunges on seeding outlook, technical weakness

 

 

Chicago Board of Trade corn futures ended sharply lower Monday, retreating on improved prospects for planting and technically inspired selling, analysts said.

 

May corn settled 19 1/4 cents lower at US$5.80 1/4, July corn ended 19 1/4 cents lower at US$5.93 3/4, and December finished 17 1/2 cents lower at US$6.05 1/4.

 

The corn belt did not get excessive rainfall over the weekend, and with warmer temperatures forecast for the region, traders extracted weather premium from prices amid ideas planting progress could pick up significantly, analysts said.

 

"It's a nice spring day and you can smell the planters rolling across some of the Midwest," said Chad Henderson, analyst with Prime Ag Consultants in Brookfield, Wis.

 

The trade is taking some risk premium from prices, as warm, dry conditions will provide windows of planting opportunities in some areas of the Midwest over a 3- to 5-day period, he added.

 

Otherwise, a quiet news front kept technical factors in play, with declines accelerating once the July futures plunged through psychological support at the US$6.00-per- bushel level, traders said. The July contract briefly fell to exchange-imposed 30-cent lower daily trading limits.

 

Overbought market conditions and a lack of a bullish catalysts from outside markets aided corn's lower theme as well, Henderson added.

 

Weather will play a key role in the near-term direction of prices, with planting concerns remaining a supportive feature in the market's big picture, but short term, the market is shaking out a few longs, a CBOT floor analyst said.

 

The DTN Meteorlogix forecast called for mostly dry weather to cover the main U.S. crop areas Monday. A band of light rain showers is forecast to move across the northwestern Midwest on Monday afternoon. This scenario offers a chance at fieldwork progress in the eastern Midwest - Indiana, Ohio, Michigan, as well as some field drying in the Ohio Valley and Delta, Meteorlogix said. Temperatures will be warm, with values in the 70s Fahrenheit over much of the region. This warmer and drier pattern will be a big assist for field drying.

 

The latter half of this week is forecast to bring a new round of showers and thundershowers to the western and northern Midwest, with rains totaling up to one inch or greater. This moisture will continue to slow down fieldwork prospects in Iowa, Minnesota, the Dakotas, Nebraska, and northern Missouri, Meteorlogix forecasts. However, lighter rains will occur in southern Missouri eastward through Illinois, Indiana and Ohio provides the prospect for additional fieldwork to progress over the eastern Midwest, with a chance for some fieldwork in the high-production areas of central Illinois as well, Meteorlogix added.

 

The U.S. Department of Agriculture is scheduled to release its weekly update on the corn planting pace in its weekly crop progress report Monday at 4 p.m. EDT. Analysts anticipate a corn planting pace in a range of 7% to 10%.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated near 12,000 lots.

 

CBOT oat futures finished lower on electronic selling, thought to be from funds, a floor trader said. It looked as though there was a change in ownership, with commercials seen as buyers, he said.

 

Statistics Canada on Monday pegged oat plantings at 4.485 million acres, compared to 5.408 million last year and trade expectations of 4.48 million to 5.1 million. The estimate was "a tad supportive" for the market, a trader said. July oats closed down 6 cents at US$3.83 per bushel.

 

Ethanol futures ended mostly lower. May ethanol slipped 1.5 cents to US$2.54 per gallon, and June ethanol dropped 1 cent to US$2.48.