June 9, 2006

 

CBOT Corn Review on Thursday: Down on dund sales, weather,outside markets

 

 

Corn futures at the Chicago Board of Trade finished weaker Thursday as early fund liquidation, tumbling outside markets and bearish near-term weather forecasts pressured prices, sources said.

 

July corn declined 5 1/2 cents to US$2.45 1/2 per bushel and December retreated 5 3/4 cents to US$2.71.

 

The funds sold it early, the outside markets got hit again and the weather forecast the market is following is bearish, said Vic Lespinasse of AG Edwards & Sons.

 

There is a divergence between the U.S. and European weather models. The U.S. model is forecasting cool and wet conditions and the European model is calling for hot and dry, and the market followed the U.S. model on Thursday, Lespinasse said.

 

Overall commodity fund selling was estimated at 7,500 contracts.

 

It was a commodities market retreat, with the metals markets getting bruised again, a commission house broker said. In addition, people are hesitant about putting on fresh positions ahead of Friday's U.S. Department of Agriculture reports, he added.

 

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.

 

Active rolling out of July into September was noted with estimates of the "Goldman roll" at 10,000 contracts, a floor source said.

 

Near-term weather forecasts are also bearish for prices, a floor analyst said.

 

Scattered showers and thundershowers are forecast from Thursday and Friday in the northern portion of the region Friday and southern areas on Saturday, DTN Meteorologix Weather said. Amounts are expected to average .25-1.00 inch and locally heavier and coverage should average 60-80 percent, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, there is a chance for scattered showers developing in the western and northern sections of the region on Friday and in eastern and southern areas on Saturday, DTN Meteorologix Weather said. Rainfall should average .10-.50 inch and locally heavier.

 

On technical charts, July corn traded an inside day, within the range established in Wednesday's session. The contract settled above its 100-day moving average but below 10-day, 20-day and 40-day moving averages.

 

Buyers on Thursday included JP Morgan, which bought 2,500 July. Merrill Lynch bought 700 July, Tenco bought 600 September and 200 December and Rand bought 400 September.

 

Sellers Thursday included ADM, which sold 3,500 July. Citigroup sold 2,000 July, JP Morgan sold 1,000 July, O'Connor sold 1,000 July, and UBS sold 800 July and 200 September.

 

Oat futures settled modestly lower in a very light trading session, a floor trader said. The market is waiting on Friday's report for some fresh inputs, he added. Light rolling out of July into September was noted, sources added.

 

The July contract fell 1 1/2 cents to US$1.86 1/2, and the December contract slipped 1/2 cent to US$1.88.

 

Ethanol futures ended unchanged to lower in thin trade. The June contract settled unchanged at US$3.70 per gallon and the August contract fell 5 cents to US$2.95.

 

Friday, the USDA is scheduled to release the monthly supply and demand reports at 7:30 a.m. CDT (1230 GMT).

 

After the close, the Commodity Futures Trading Commission is scheduled to release the latest commitment of trader's data for the week ended June 6.