June 20, 2007

 

CBOT Corn Review on Tuesday: Settles limit down on weather forecast

 

 

Chicago Board of Trade corn futures settled limit down Tuesday in several nearby months, plunging near midday as forecasts predicting rain for the eastern U.S. Midwest this weekend pushed prices sharply lower, analysts said.

 

July corn settled 20 cents lower at US$3.96 per bushel, September fell 20 cents to US$4.04, and December declined 20 cents to US$4.03 1/2.

 

December is projected to open 3 cents lower in overnight trading based on synthetic options trading, a floor trader said.

 

On Monday afternoon, the U.S. Department of Agriculture reported that crop conditions in Illinois, Indiana and Ohio declined sharply from the previous week as the lack of rainfall and warmer-than-normal temperatures negatively impacted the crop in the week ended June 17.

 

However, scattered rainfall in the eastern U.S. Midwest Monday evening and overnight helped lead the market lower early in the session with the losses extended on midday forecasts, an analyst said.

 

The northern two-thirds of Illinois, Indiana and Ohio could receive rains of 0.50-1.50 inches this weekend, helping to alleviate the dry conditions in those states, said David Streit, a meteorologist with Cropcast Weather Services.

 

It's all about the weather this time of year, said Don Roose, president of US Commodities in West Des Moines, Iowa. The corn market fell sharply on anticipation of a change in the weather pattern, potentially adding some needed moisture in the dry-drought areas of Illinois, Indiana and Ohio, Roose said.

 

Technical selling and long liquidation added to the losses with commodity fund selling estimated at 11,000 contracts.

 

The weather remains the feature and Wednesday's price direction depends upon the overnight forecasts, a commission house analyst said.

 

In open auction trading, ADM Investor Services sold 1,000 December, Man Financial sold 1,000 December and Rosenthal sold 1,000 December.

 

In options trading, RJ O'Brien sold 2,500 July US$4.70 calls, and JP Morgan sold 2,500 July US$4.20 calls and 500 December US$4.00 calls.

 

On daily technical charts, July settled below its 10-day and 100-day moving averages.

 

Oat futures settled sharply lower as fund selling and spillover weakness from the losses across the rest of the floor pushed prices lower, an analyst said. The funds sold December from the opening bell and continued to sell it much of the day, he added.

 

July oats dropped 16 3/4 cents to US$2.72 1/4 per bushel while December fell 16 1/4 cents to US$2.77 3/4.

 

Ethanol futures ended lower in very thin trade. July ethanol settled 4.8 cents lower to US$1.95 per gallon and August fell .008 cent to US$1.938.