June 27, 2007

 

CBOT Corn Review on Tuesday: Settles mixed; unable to keep early gains

 

 

Chicago Board of Trade corn futures ended mixed Tuesday, unable to sustain early gains as midday weather forecasts added more rain in their near-term outlooks with some forecasters removing the heat predicted in their forecasts for next week, analysts said.

 

July corn declined 1 1/4 cents to US$3.56 1/2 per bushel, September finished unchanged at US$3.67, and December rose 1 cent to US$3.75.

 

"A lot of rain is on the maps, and corn felt it today," an analyst said.

 

Ideas that recent losses were overdone and due for a correction ahead of Friday's acreage and stocks reports provided support early in the session with sharply higher wheat futures adding to the positive tonnee, the analyst said.

 

December wheat rallied 19 1/4 cents to US$6.34 per bushel, a new contract high with July matching an 11-year high.

 

U.S. planted corn acreage in 2007 is estimated at 90.585 million acres, according to a survey of 20 analysts by Dow Jones Newswires. This compares to the 90.454 million acres the U.S. Department of Agriculture estimated in March and is sharply higher than the 78.327 million planted in 2006.

 

Quarterly corn stocks as of June 1 are projected at 3.467 billion bushels, according to a survey of analysts, lower than the 4.362 billion in June 2006.

 

Corn prices experienced a "dead cat bounce" Tuesday after the severe technical pressure seen in recent sessions, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. Traders covered some of their short positions ahead of the reports due Friday, he added. The recent change in the weather has changed the composition of the market, he said.

 

Without the gains in wheat, corn would have had a hard time trading higher, a commercial trader noted. Bear market spreading late in the session helped reverse the gains in the nearby months, the commercial trader added. The overnight forecasts and potential for position evening ahead of Friday's USDA reports will determine price direction Wednesday, a commission house analyst said.

 

On daily technical charts, July remained below its major moving averages, and at its lowest level since May 10. December remained above its 200-day moving average.

 

In open auction trading, Tenco bought 3,000 December, Bunge bought 800 September and Iowa Grain sold 1,500 December.

 

Commodity fund buying was estimated at 3,500 contracts.

 

In options trading, FC Stonnee bought 2,500 December US$4.80 calls, JP Morgan bought 1,000 August US$3.80 calls and sold 1,000 August US$4.20 calls.

 

Oat futures ended higher as spread trading remained the dominant feature as traders rolled out of their July positions into September and December, an analyst said. Sharply higher wheat futures provided underlying support for the overall market, he said.

 

July oats gained 2 cents to US$2.63 per bushel and December rose 4 1/2 cents to US$2.73 1/2.

 

Ethanol futures settled lower in thin trade. July ethanol declined 2.6 cents to US$1.93 1/2 per gallon and August, which did not trade, declined 1.7 cents to US$1.918.