May 17, 2006

 

CBOT Corn Review on Tuesday: Down slightly on planting pace

 

 

Chicago Board of Trade corn futures closed fractionally lower Tuesday, pressured by news that U.S. seedings were 85% complete as of Sunday, which was at the top end of trade expectations and also above the five-year average of 77% planted.

 

July corn lost 1 cent to US$2.59 a bushel and September shed 1/2 cent to US$2.70.

 

Prices fell marginally as the market consolidates Friday's bullish U.S. Department of Agriculture supply/demand report in which 2006-07 ending stocks were forecast to drop to 1.14 billion bushels.

 

"We've done no technical damage. We continue to consolidate from sharp gains from the USDA report. We continue to see the inflow of fund money into the pit and we're starting to see commercial hedging show up," said independent agricultural analyst John Kleist, summing up the day's trade.

 

Indeed, funds were active participants in the market, but not to the degree seen in recent sessions. As of 1330 EDT, funds had bought a net 4,700 contracts, led by UBS and Man Financial each buying 2,000 July, Tenco buying 1,000 December, Fimat buying a net 800 July and Calyon Financial buying 500 December and 400 July.

 

J.P. Morgan provided the bulk of the selling pressure, shedding 1,000 July and 1,400 September contracts.

 

Commercial and local selling also pressed the market lower, along with hedging pressure from renewed producer sales, sparked by the 11-cent-a-bushel jump in prices last Friday.

 

Weather conditions are expected to be mostly dry in the western corn belt into Wednesday, with a few light showers possible Thursday and Friday. Temperatures are expected to average below normal Tuesday and near to below normal through the weekend, DTN Meteorlogix said.

 

Light rain and drizzle is forecast for the eastern belt through Thursday, with dry conditions or a few light showers Friday through Sunday. Temperatures will average near to below normal through Thursday, with much-below-normal-readings over the weekend. Temperatures are expected to climb to near to above normal by next week, which will benefit the crop.

 

While cool Midwest temperatures continue to slow corn and soybean growth, detrimental effects are unlikely, Earth Satellite's Cropcast said Tuesday as part of its monthly forecast.

 

Midwest rains in June should aid crops, with cool conditions in July aiding corn pollination and soybean bloom. Late-summer dryness will expand across the Midwest but will pose little threat to the crops.

 

The July/September spread settled at 11 cents, July under, widening 1/2 cent from Monday's settlement.

 

June ethanol rose 3.5 cents a gallon to US$2.8850 a gallon and July gained 5 cents to US$2.85.

 

July oats were down 1/4 cent to US$1.97 1/2 a bushel, following the modest losses in corn.