June 13, 2006

 

CBOT Corn Review on Monday: Higher on drier US weather forecasts

 

 

Corn futures at the Chicago Board of Trade finished with moderate gains Monday but off earlier levels as supportive weather forecasts provided the catalyst for higher prices, sources said.

 

July corn settled 5 1/2 cents higher at US$2.47 1/2 per bushel and December rose 5 3/4 cents to US$2.73 1/2.

 

The market was underpinned by forecasts calling for hot and dry conditions over the next 7-10 days, a commission house broker said.

 

In addition, people were putting some weather premium back into the market, after the market declined last week, a floor trader said. However, any change in the forecast could change the market's direction pretty quickly, he noted.

 

Short covering, after last week's losses were also cited by several traders as supportive to Monday's advances.

 

Near the close, the gains were trimmed on light profit taking based on some late forecasts that expect wetter weather to develop, sources said.

 

Mostly dry weather is forecast in the western U.S. Midwest through Thursday with a chance for a few thundershowers to develop Thursday night into Friday, DTN Meteorologix Weather said. In its 6-to-10 day outlook, temperatures are expected to average above normal with precipitation near to above normal north and near to below normal south, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, dry conditions with only a few isolated light showers expected on Tuesday and Wednesday with dry weather forecast on Thursday, DTN Meteorologix Weather said. In the 6-to-10 day outlook for the region, temperatures are expected to average near to above normal and rainfall near to below normal, DTN Meteorologix Weather said.

 

Export inspections were released during the session and totaled 39.958 million bushels, slightly below the 40-49 million expected by analysts. The report had no impact, sources said.

 

Buyers on Monday included Rand, which bought 1,000 July and 1,000 September. JP Morgan bought 1,000 July, Man Financial bought 700 December and 200 July and ADM bought 400 July.

 

Sellers on Monday included Man Financial, which sold 800 September. Fimat sold 600 July, JP Morgan sold 500 July and 300 September, the Refco division of Man Financial sold 800 September and Citigroup sold 300 December.

 

In options trading, Goldenberg-Hehmeyer bought 3,000 July US$2.60 calls.

 

Oat futures settled at higher levels as strong fund buying early in the day set the tonnee, a floor trader said. The July contract settled 8 1/4 cents higher at US$1.94 3/4 per bushel. The December contract gained 7 cents to 1.93 3/4.

 

Ethanol futures ended mostly higher in modest trading. The June contract was last at US$3.80, up 7 1/2 cents per gallon and the July contract was 2 cents higher at US$3.48.

 

Monday afternoon the U.S. Department of Agriculture is scheduled to release the weekly crop progress report at 3 p.m. CDT (2000 GMT). Floor traders and analysts expect corn's good-to-excellent rating to remain steady to down 1-2 percentage points from last week's 71% rating in that category.