June 8, 2006

 

CBOT Corn Review on Wednesday: Ends higher, recovers from early losses

 

 

Corn futures settled modestly higher Wednesday, recovering from losses set earlier in the session on speculative and technical selling as renewed buying interest, short covering after recent losses and technical strength helped futures recover, sources said.

 

July corn settled 3 1/4 cents higher at US$2.51 per bushel and December also gained 3 1/4 cents to US$2.76 3/4.

 

Speculative selling pressed the market early on with a lack of buying interest adding to the weak tonnee, a commission house analyst said. At one point in the session, July was down more than 13 cents from Friday's high.

 

However, the selling dried up and the market slowly began to recover as "there was nothing to sell" a floor broker noted.

 

Early technical weakness helped push the market lower but the inability of July to remain below its 100-day moving average around US$2.45 led buyers back into the market, a commission house analyst noted.

 

Several traders noted a change to a longer-term forecast to hot and dry conditions, but a floor analyst noted that the forecast also had good moisture predicted in it earlier in the period.

 

A commercial connected analyst said that after three days of weaker prices, the market was poised to go higher, especially with the supply and demand report due out on Friday.

 

The average of 14 analysts surveyed by Dow Jones estimates 2005-06 corn ending stocks at 2.204 billion bushels, 22 million lower than estimated by the USDA in May.

 

The average analyst estimate of 2006-07 corn ending stocks is 1.221 billion bushels, 80 million bushels above the 1.141 billion the USDA projected in May.

 

Near term weather remains favorable to crop development, several traders noted.

 

DTN Meteorologix Weather expects scattered rain showers in the U.S. Midwest over the next five days. Periodic showers and thunderstorms are forecast to produce near-to-above normal rainfall in the western U.S. Midwest, and near-to-below normal rainfall in the eastern Midwest. The western section of the region could use additional precipitation and the eastern part of the region could benefit from a drier trend, DTN Meteorologix Weather said.

 

Overall commodity fund selling was estimated at 3,000 contracts, which was lower than earlier totals as the funds bought back positions sold earlier, sources said.

 

Commodity index funds were estimated to have rolled 20,000 July contracts into September as part of the "Goldman roll," a floor source said.

 

Buyers Wednesday included Merrill Lynch, which bought 2,000 July and 2,000 September, JP Morgan bought 1,500 July and 400 September, Goldenberg-Hehmeyer bought 1,500 July and Tenco bought 600 September.

 

Sellers Wednesday included ADM, which sold 4,000 July, JP Morgan sold 2,500 July, Rand sold 2,000 December and the Refco division of Man Financial sold 800 July.

 

Oat futures ended mostly higher as spillover support from stronger corn and what futures provided support, sources said. The market currently lacks a feature so it followed the other grains today, a commission house analyst said.

 

July oats settled 1 1/2 cents higher at US$1.88 per bushel and December finished unchanged at US$1.88 1/2.

 

Ethanol futures finished mixed in light trading with the July contract up 1/2 of a cent to US$3.41 per gallon. The August contract declined 6 cents to US$3.00.

 

On Thursday, the USDA is scheduled to release the weekly export sales report for the week ended June 1. Analysts estimate sales between 800,000 and 1.0 million metric tonnes. Sales for the week ended May 25 were 1.234 million tonnes.