June 14, 2006

 

CBOT Corn Review on Tuesday: Down on forecasts, outside market sell-off

 

 

Corn futures at the Chicago Board of Trade settled lower Tuesday as a steep sell-off in outside markets and bearish weather forecasts undermined futures, floor sources said.

 

July corn fell 4 1/4 cents to US$2.43 1/4 per bushel and December dropped 4 3/4 cents to US$2.68 3/4.

 

"The market lives and dies with each forecast this time of year," said Vic Lespinasse of AG Edwards & Sons. Since the supportive weather outlook on Monday morning, each weather forecast since then has increased the possibility of rain and that is pressuring the market, he added.

 

In addition, gold was down over US$40, silver was down heavily as well, and the corn market couldn't ignore the sell-off, he noted.

 

The outside markets got pummeled and the midday weather maps confirmed the morning forecasts for better moisture prospects with the market retreating on the news, a commission house analyst said.

 

Heavy spread trading, not part of any index roll, was noted with the July-September spread trading 30,000 contracts, floor sources said.

 

Increased thunderstorm activity is possible in the latest 6-10-day outlook as a weak upper level disturbance is forecast for the U.S. Midwest, DTN Meteorologix Weather said.

 

There are indications that scattered showers and thundershowers could develop in parts of the western U.S. Midwest this weekend, DTN Meteorologix Weather said. Amounts expected are from .10-.50 inch and locally heavier.

 

Moving into next week there are more frequent opportunities for rainfall as the system that has been responsible for the hot and dry weather in the plains moves eastward, allowing some return flow moisture out of the Gulf of Mexico into the U.S. Plains and the U.S. corn belt, DTN Meteorologix Weather said.

 

Buyers Tuesday included JP Morgan, which bought 600 July. UBS bought 300 September, and Fimat bought 300 September.

 

Sellers Tuesday included Man Financial, which sold 2,500 December as part of a spread. ABN Amro sold 1,000 December, Tenco sold 500 December and 300 September, and Fimat sold 400 July and 200 September.

 

In spread activity, Man Financial bought 2,500 December wheat and sold 2,500 December corn.

 

In options trading Fortis sold 4,000 July US$2.40 puts.

 

Oat futures settled little changed in light trading as the lack of interest kept futures within a narrow trading range, a floor trader said. People were trading markets other than oats, a floor source said.

 

The July contract ended up 1/2 cent at US$1.95 1/4 per bushel and the December contract gained 1/4 cent to US$1.94.

 

Ethanol futures did not trade and settled higher. The June contract rose 17 1/2 cents to US$3.97 1/2 per gallon and the July contract ended up 9 cents at US$3.57.