June 15, 2006

 

CBOT Corn Review on Wednesday: Down on weather forecasts,technical selling

 

 

Corn futures ended moderately lower Wednesday, with July finishing at its lowest levels since May 8 on bearish weather forecasts and technical selling, sources said.

 

July corn fell 6 1/4 cents to US$2.37 per bushel and December dropped 6 1/2 cents to US$2.62 1/4.

 

The midday weather forecasts confirmed the earlier outlooks and traders liquidated their positions, a commission house analyst said. Once the forecast came out, and July fell below last week's low, technical selling increased and the market continued to decline, he added.

 

The crack in the outside market markets Tuesday sent a financial signal, and the market was on guard, said Don Roose of US Commodities in West Des Moines, Iowa. "The market's momentum is swinging down and that is really the key," he noted.

 

The main U.S. weather model has been pretty consistent over the past 24 hours and the midday outlook continued that forecast, a source said.

 

Technical stop-loss selling on the close added to the losses as "some people threw in the towel," a floor trader said.

 

In the western U.S. Midwest, spotty showers are forecast Wednesday and Thursday with additional showers forecast on Friday and Saturday producing up to 3/4 inch of rain in parts of the region, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, mostly dry weather is predicted through Sunday, when thundershowers are expected east of the Mississippi River bringing up to .50 inch of rain. Temperatures are expected above normal during the next five days in a range of 85-92 degrees Fahrenheit in the region, DTN Meteorologix Weather added.

 

Buyers Wednesday included Merrill Lynch, which bought 2,100 September; the Refco division of Man Financial bought 1,500 December; Iowa Grain bought 600 July; and UBS bought 500 September.

 

Sellers Wednesday included Calyon Financial, which sold 1,000 December and 500 July; Man Financial sold 900 September and 500 July; Rand sold 500 December; and ABN Amro sold 500 December.

 

Overall commodity fund selling was estimated at 4,000-5,000 contracts.

 

In spread trading, O'Connor bought 1,000 July-December and bought 1,100 December-July.

 

In options trading, ADM bought 1,000 December US$2.90 calls and sold 1,000 December US$3.40 calls and 1,000 December US$2.40 puts.

 

Oat futures ended lower as earlier light fund buying gave way to spillover weakness from wheat and corn, an oat trader said.

 

July oats fell 2 1/4 cents to US$1.93 per bushel and the December contract slid 2 3/4 cents to US$1.91 1/4.

 

Ethanol futures settled higher in light trade. The July contract gained 13 cents to US$3.70 per gallon and the December futures ended 7 cents higher at US$2.67.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended June 8. Analysts expect corn export sales between 800,000-1.050 million metric tonnes.