June 7, 2006

 

CBOT Corn Review on Tuesday: Down on wheat selloff, fund sales, weather

 

 

Corn futures at the Chicago Board of Trade finished lower Tuesday, reaching session lows near the close as a late sell-off in wheat futures added to earlier losses, sources said.

 

July corn settled 5 1/4 cents lower to US$2.47 3/4 per bushel and December also lost 5 1/4 cents to US$2.73 1/2.

 

Moderate fund selling, Monday's good crop conditions report, and near term weather favorable to crop development also weighed on prices sources said.

 

The funds were sellers Tuesday, apparently liquidating some of their positions, a commission house broker said.

 

Overall commodity selling was estimated at 9,500 contracts, sources said.

 

Near-term weather forecasts continue to support crop development and Monday's crop progress report revealed the crop in very good condition, he added.

 

The U.S. Department of Agriculture reported that 71% of the U.S. corn crop was in good-to-excellent condition, up 1 percentage point from the previous week and in line with expectations.

 

A floor trader noted early pressure from weaker outside markets with metals, energy and stocks lower and the dollar higher after Monday's comments about inflation from the Federal Reserve.

 

The corn market has been trading the demand side for quite a while, however the market focused on the supply side today and moved lower as it considered the crop progress and the weather, a floor analyst said.

 

Mainly favorable weather is forecast over the next 10 days in the western U.S. corn belt, DTN Meteorologix Weather said. Mainly dry weather is forecast for Wednesday and early Thursday before scattered thundershowers develop in northern sections of the region late Thursday. Mostly dry weather is predicted on Friday before another chance for scattered showers and thundershowers develops during the weekend. Temperatures in the period are expected to average near to above normal in the period.

 

In the eastern U.S. Midwest, mainly dry conditions are forecast in the region Thursday through Saturday after scattered to widely scattered thunderstorms move through on Tuesday and Wednesday, DTN Meteorologix Weather said. Temperatures are expected to average near to above normal for much of the period.

 

On technical charts, July gapped open lower and settled beneath its 10-day, 20-day and 40-day moving averages.

 

Buyers on Tuesday included Tenco, which bought 700 September. Merrill Lynch bought 500 July, Fimat bought 500 September and 200 July and O'Connor bought 300 July and 200 September.

 

Sellers Tuesday included Prudential, which sold 3,500 December. Shatkin sold 2,000 December, Citigroup sold 1,100 July and 200 September, and Goldenberg-Hehmeyer sold 1,200 July and 700 December.

 

Oat futures settled lower undermined by spillover weakness from wheat and corn, floor sources said. The July contract lost 4 cents to US$1.86 1/2, and the December contract declined 3 cents to US$1.88 1/2.

 

Ethanol futures finished little changed in quiet trading with the July contract up 1 1/2 cents at US$3.40 1/2 per gallon.