May 17, 2008

 

CBOT Corn Review on Friday: Falls on profit-taking, weather

 

 

Chicago Board of Trade corn futures traded lower Friday amid profit-taking before the weekend, traders and analysts said.

 

July corn was down 8 cents to US$5.91 per bushel, September corn was down 7 3/4 cents to US$6.03 1/2, and December corn was down 5 3/4 cents to US$6.16 3/4. Funds sold 6,000 contracts.

 

A dry weather forecast for the weekend and early next week in the U.S. Midwest gave traders little reason not to take profits ahead of the weekend, a trader said.

 

"I don't think people wanted to come in on Monday and see a wide-open weather forecast," he said, explaining the profit-taking.

 

He added that crude oil, which helped fuel a rally earlier in the day, broke from its high, helping push corn lower.

 

July corn's finish below its 50-day moving average of US$5.93 1/4 was discouraging for buyers, a trader said. It was the first time it closed below that average since March 24.

 

The July contract had rallied to 9 cents higher early Friday, but was unable to break through initial technical resistance at US$6.08, said Shawn McCambridge, senior grains analyst with Prudential-Bache. He said the rally was supported by short covering.

 

"Basically, once we cleaned shorts out of the market, we didn't have follow-up buying," McCambridge said.

 

The second half of May is often a slow time for the corn market, analysts say, since most of the crop has usually been planted and summer weather patterns that could affect yields have yet to emerge. Although the crop was just 51% planted by May 11, well behind average according to the U.S. Department of Agriculture, analysts said growers have likely made a lot of progress in recent days.

 

Estimates for Monday's crop progress report from the USDA put completed plantings between 70% and 82% through Sunday. Analysts say the market will still start paying more attention to emergence, which could be lagging because even when the weather has been dry across the corn belt, it has still been cold.

 

"I think they are going to zero in on (emergence) Monday," said Jerry Gidel, a grain analyst with North American Risk Management.

 

The DTN Meteorlogix 10-day weather forecast calls for a dry weather pattern for the first time this growing season, with warmer, dry weather across the Midwest in what "will be the best stretch of planting weather by far."

 

CBOT oat futures were flat Friday. July oats ended flat at US$3.94 per bushel, September oats were flat at US$4.05 and December oats were down 1/2 cent to US$4.19 1/2.

 

Ethanol futures were lower. June ethanol ended down US$0.022 to US$2.476 per gallon and July ethanol was down US$0.003 to US$2.46.