June 10, 2006

 

CBOT Corn Review on Friday: Down on funds, technicals, despite USDA

 

 

Corn futures settled lower Friday, shrugging off supportive ending stocks data from the U.S. Department of Agriculture this morning as a combination of factors pressured the market, sources said.

 

July corn settled 3 1/2 cents lower at US$2.42 per bushel, down 17 1/2 cents from last Friday's close and at its lowest level since May 10. December fell 3 1/4 cents to US$2.67 3/4.

 

Futures were unable to maintain early gains based on a 50 million-bushel reduction in old- and new-crop ending stocks levels and light fund buying, as a sell-off in wheat futures to lower levels encouraged speculative selling, a floor analyst said.

 

The USDA reported that 2005-06 ending stocks declined by 50 million bushels to 2.176 billion bushels from 2.226 billion in May as it increased exports by 50 million bushels. In addition, 2006-07 ending stocks were reduced by similar amount, to 1.091 billion bushels from 1.141 billion.

 

Traditional commodity funds turned into sellers and liquidated some of their long positions, continuing the recent trend, a commission house analyst noted.

 

Speculative and technical selling also weighed on the market, with July falling beneath its 100-day moving average.

 

Friday's USDA report was old news, said John Kleist of Kleist Ag Consulting, in Arlingtonne Heights, Ill.

 

It confirmed what the market saw in the last report, he noted. The new crop is dependent on the weather and the market is wringing some weather premium out of prices as the forecasts have been favorable, he added.

 

Several traders noted that the near-term weather continues to be favorable for crop development while longer- term forecasts do not agree, and the market followed the nearby forecast Friday, they said.

 

Scattered showers and thundershowers are forecast in southern sections of the western U.S. Midwest on Saturday with drier conditions expected Sunday, DTN Meteorologix Weather said. Only a few light showers are forecast for Monday and Tuesday. Temperatures are expected to be below normal over the weekend and near to below normal the first part of next week, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, scattered showers and possible thundershowers are expected Saturday and into Sunday. The heaviest of this activity, .25-1.00 inch and locally heavier, should fall in southern and some central locations, DTN Meteorologix Weather said. Temperatures are forecast below normal during the weekend, with mainly dry weather expected Monday.

 

Market participants continued to roll out of July and into the deferred contracts, sources said, with the "Goldman roll" estimated at more than 10,000 contracts.

 

Buyers Friday included Tenco, which bought 1,200 July and 1,000 December; Fimat bought 1,000 December and 900 September; Rand Financial bought 1,000 December and 700 September; and JP Morgan bought 1,000 December and 500 July.

 

Sellers Friday included JP Morgan which sold 1,000 July, 500 September, 500 December and 500 March; Man Financial sold 2,000 December; Goldenberg-Hehmeyer sold 1,000 July and 1,000 December; and Calyon sold 1,000 July.

 

In spread trading, JP Morgan spread 2,000 September-July and Calyon also spread 2,000 September-July.

 

Oat futures finished little changed in narrow range- bound activity as the market remained without a feature and followed corn and wheat futures most of the session, a floor trader said. The July contract ended unchanged at US$1.86 1/2 cents per bushel and December fell 1 1/4 cents to US$1.86 3/4.

 

Ethanol futures settled higher in light activity. The July contract finished 5.8 cents higher to US$3.46 per gallon and the August contract jumped 10 cents to US$3.05.

 

Friday after the close, the Commodity Futures Trading Commission is scheduled to release the latest Commitments of Traders data for the week ended June 6.