May 22, 2007

CBOT Corn Review on Monday: Near highs as late technical buying extends gains

 

 

Chicago Board of Trade corn futures settled moderately higher Monday and near session highs as late technical buying and supportive weather forecasts ahead of this afternoon's crop progress report helped rally the market, analysts said.

 

July corn rallied 9 3/4 cents to US$3.81 per bushel, September rose 12 1/4 cents to US$3.81 1/4, and December jumped 13 3/4 cents to US$3.80 1/4.

 

Once December moved above its 40-day moving average, additional technical buying emerged late, a floor analyst said.

 

The market was higher initially on spillover from the overnight session and weather forecasts that called for the eastern corn belt to remain mostly dry in the near-term, the analyst said.

 

Most midday forecasts did not deviate much from that outlook, limiting selling interest, the analyst added.

 

There are ideas that corn's first good-to-excellent rating Monday afternoon will be closer to 60% rather than the 70% good-to-excellent that the market was anticipating last Friday and that gave the market a boost, said Joel Karlin, an analyst at Western Milling. In addition, news reports about the possibility of less Chinese corn exports in the future and technical strength added to the positive tone, he said.

 

In a normal year the crop ratings would not be particularly big news, but this market is "going to have to kill the crop a least a half-dozen times before people are satisfied," Karlin said.

 

Export inspections were released during the session and were well under analyst estimates. The U.S. Department of Agriculture reported that 22.653 million bushels of corn were inspected for export, below the 35-40 million expected by analysts.

 

Price direction Tuesday depends on the outcome of the crop conditions report as well as the weather forecast, a trader said.

 

On daily open auction charts, July corn settled above its 40-day moving average for the first time since May 4, and it its highest level since that date.

 

Oat futures settled with moderate gains as commission house buying and spillover strength from the rest of the floor boosted prices, a commission house analyst said.

 

July oats gained 5 cents to US$2.71 1/4 per bushel while December rose 4 cents to US$2.61.

 

Ethanol futures finished slightly higher in thin activity. June ethanol settled 0.002 cent higher at 2.175 per gallon and July rose 3 cents to US$2.115.

 

Monday afternoon, the USDA is scheduled to release the weekly crop progress report for the week ending May 20 at 4:00 p.m. EDT (2000 GMT).

 

Analysts expect U.S. farmers to have seeded 88%-91% of the corn crop through May 20. Analysts also expect the government to report that 62%-65% of the crop is in good-to-excellent condition. Last year 92% of the crop was planted and 66% of the crop was rated in good-to-excellent shape.