June 16, 2006

 

CBOT Corn Review on Thursday: Technicals, funds, lead market lower

 

 

Corn futures at the Chicago Board of Trade settled lower Thursday, declining for the third day in a row, dragged down by technical and fund selling as a continued negative short-term weather forecast provided the catalyst for the losses, floor sources said.

 

July corn ended 4 cents lower to US$2.33 per bushel and December slid 3 3/4 cents to US$2.58 1/2.

 

Technical selling and fund selling pressed the market with estimates of fund sales of near 15,000 contracts, floor sources said.

 

The previous declines were in part wringing out a weather premium, the current decline seems to be wringing out an acreage premium, said John Kleist of Kleist Ag Consulting, in Arlingtonne Heights, Ill.

 

Bearish short-term weather forecasts added to the weakness, with forecasts expecting scattered rain in the U.S. Midwest over the next several days. The midday forecasts were basically unchanged from the earlier predictions, a floor source said.

 

In the western U.S. Midwest, periods of scattered showers and thunderstorms are forecast in western and northern locations Thursday and Friday with moisture reaching the southern and eastern areas on Friday and Saturday, DTN Meteorologix Weather said. Amounts could reach .30-1.00 inch and .10-.50 inch, respectively. Mostly dry conditions are expected Sunday and Monday.

 

Temperatures will average above normal early in the period and near to above normal later in the period.

 

In the eastern U.S. Midwest, mostly dry conditions are predicted through Friday with a chance for a few thundershowers in the west on Saturday. There is a chance for widely scattered showers and thundershowers on Sunday with amounts .10-50 inch and locally heavier, DTN Meteorologix Weather said.

 

Temperatures are expected to average above normal early in the period and near to above normal later in the period, DTN Meteorologix Weather said.

 

Before the opening of pit trading, Informa Economics released a corn acreage estimate of 80.329 million acres, well above the 78.019 million estimated by the U.S. Department of Agriculture in March.

 

Floor traders noted the market expects a larger number from the USDA in June with the Informa news having little impact.

 

Better-than-expected weekly corn exports of 1.465 million bushels for the week ended June 8, had little impact as the market remains focused on the supply half of the equation, sources said.

 

Buyers on Thursday included JP Morgan, which bought 3,000 July and 200 September. Rosenthal bought 800 September, Fimat bought 600 September, 300 July and 300 December, and FC Stonnee bought 500 July.

 

Sellers on Thursday included ADM, which sold 4,000 December and 1,000 July (thought to be fund related). Man Financial sold 2,400 July, 800 September, and 700 December, R.J. O'Brien sold 1,000 December and 500 September, and Fortis sold 1,000 December.

 

In spread trading JP Morgan bought 4,000 July-September.

 

In options trading, Man Financial bought 2,000 December US$2.50 puts and sold 2,000 July US$2.40 puts.

 

Oat futures settled modestly higher, shrugging off the losses in corn futures as light fund buying steadied prices in thin trade, a floor source said.

 

The July contract gained 1 1/4 cents to US$1.94 1/4 per bushel and the December contract rose 3 1/4 cents to US$1.94 1/2.

 

Ethanol futures finished higher in light trading. The July contract did not trade and settled 10 1/2 cents higher at US$3.80 1/2 per gallon.