April 25, 2006

 

CBOT Corn Review on Monday: Declines on weather, technical selling

 

 

Corn futures settled lower Monday, slipping to levels not seen since late March in the July contract as a bearish weather outlook and light technical selling weighed on the market, sources said.

 

May corn fell 3 3/4 cents to US$2.32 3/4 per bushel, July also declined 3 3/4 cents, to US$2.44 1/4, and December fell 3 3/4 cents to US$2.67.

 

"The weather forecast is bearish for corn," a floor trader said. Favorable planting weather is expected later this week and the 6- to 10-day outlook is also conducive to planting, he added.

 

A stronger start based on higher prices in overnight trade dissipated early, despite a stronger-than-expected export inspection figure. The U.S. Department of Agriculture reported that corn inspected for export was 50.147 million bushels as of April 20, well above expectations of 30 million-38 million bushels, floor sources said.

 

There wasn't much in the way of fresh news that could support the market, a floor trader said. Energy and metal futures were both weak, and they had acted as support for corn last week, he added.

 

Dry weather is forecast to return to the western U.S. Midwest on Tuesday and continue through Thursday after scattered showers and thunderstorms move through the region with .25-1.00 inch expected, DTN Meteorlogix Weather said. In the 6- to 10-day outlook, precipitation is expected near to below normal and temperatures are forecast to average near to above normal.

 

In the eastern U.S. Midwest, after scattered rainfall Monday and Tuesday, dry weather returns Wednesday and Thursday, before scattered showers return to the region on Friday, DTN Meteorlogix Weather said.

 

In the 6- to 10-day forecast, temperatures are expected to average near to below normal with rainfall near to below normal north and near to above normal south.

 

On technical charts, July corn traded down into an upside price gap created in late March after the prospective plantings report.

 

In addition, July traded an outside day with a higher high and a lower low than in Friday's session. July remained below its 10-day moving average but above most other major moving averages.

 

Buyers Monday included JP Morgan, which bought 1,000 July and 300 December, Fimat bought 500 May, Man Financial bought 300 July and 100 May, FC Stonnee bought 300 May, RJ O'Brien bought 200 May and Bunge bought 100 May.

 

Sellers Monday included Citigroup, which sold 1,000 July, Goldenberg-Hehmeyer sold 1,000 July, JP Morgan sold 1,000 July and 500 May, Rand sold 300 December, RJ O'Brien sold 200 May, and FC Stonnee sold 200 May.

 

Commodity fund selling was estimated at 1,000 contracts.

 

Oats futures settled higher on light fund buying ahead of Tuesday's Statistics Canada acreage report, floor sources said.

 

The May contract settled 2 1/4 cents higher to US$1.75 3/4 per bushel, July rose 3 cents to US$1.82 1/4, and December oats finished 1 1/4 cents higher to US$1.74.

 

Ethanol futures unchanged to lower in light activity. May ethanol settled 7 cents lower to US$2.67 per gallon, and June fell 4 cents to US$2.67 per gallon.

 

On Monday, the USDA is scheduled to release weekly crop progress at 3 p.m. CDT. Traders and analysts expect that this afternoon's weekly crop progress report would show corn plantings 20%-23% completed as of April 23.