May 30, 2007

 

CBOT Corn Review on Tuesday: Down on rain, forecasts, technical selling

 

 

Chicago Board of Trade corn futures settled lower Tuesday, unable to overcome early weakness built on rain over the weekend in the U.S. Midwest and technical selling, analysts said.

 

July corn dropped 11 1/4 cents lower to US$3.64 3/4 per bushel, September fell 9 1/2 cents to US$3.67 3/4, and December declined 7 1/2 cents to US$3.67 1/2.

 

"The corn crop looks pretty good, and right now it's tough too make it look bad," said Jason Britt, an analyst with Central States Commodities in Kansas City.

 

Rain in the eastern U.S. Midwest over the weekend eased dryness concerns in that region, and forecasts calling for additional moisture over the next several days in parts of the U.S. Midwest added to the weak tone, a floor trader said.

 

Midday weather forecasts were unchanged to slightly wetter than earlier outlooks and added to the poor tone.

 

Technical selling with July trading below its 200-day moving average for the first time since May 15 contributed to the losses, as did speculative selling.

 

Some short position holders who evened up on Friday ahead of the long weekend appear to have re-established short positions Tuesday, a floor analyst said.

 

Spillover from sharply weaker crude oil futures also added to the declines.

 

Nearby crude oil was down over US$2 per barrel when corn closed.

 

Export inspections were within the range of analyst estimates and had little impact.

 

The U.S. Department of Agriculture reported that corn inspected for export totaled 41.291 million bushels for the week ended May 24, within the 25-45 million expected by analysts.

 

Price activity remains at the mercy of the weather forecasts, said Central States' Britt. If the rain forecast for the next 3-4 days doesn't materialize, corn could try to trade the top side of the recent range, Britt said.

 

A floor trader noted that a sharp increase or decline in crop conditions in Tuesday afternoon's crop progress report could influence market direction.

 

Analysts expect conditions to decline by 1-3 percentage points from last week's 78% good-to-excellent rating.

 

On daily technical charts, July ended below its major moving averages.

 

Commodity fund selling was estimated at 4,000 contracts.

 

Oat futures settled lower as light spillover pressure from corn and wheat weighed on the market, though "oats were a poor follower," a floor analyst said.

 

July oats fell 1 1/2 cents to US$2.74 per bushel and December declined 1 1/4 cents to US$2.63 1/2.

 

Ethanol futures finished mostly higher in light trade. June ethanol gained 2.4 cents to US$2.23 cents per gallon and July ended up 1.7 cents to US$2.09.

 

Tuesday, the U.S. Department of Agriculture is scheduled to release the weekly crop progress report for the week ending May 27 at 4 p.m. EDT (2000 GMT).