June 28, 2006

 

CBOT Corn Review on Tuesday: Higher on wheat gains, midday forecasts

 

 

Corn futures settled higher Tuesday, benefiting from supportive midday weather forecasts and the strength in wheat futures, floor sources said.

 

July corn gained 2 1/4 cents to US$2.25 1/4 per bushel and December also rose 2 1/4 cents to US$2.51 1/4.

 

A supportive midday weather forecast helped supply strength to the market, a floor analyst said. The latest 6- to 10-day forecast predict warmer and drier weather than the previous outlook in the western and northern sections of the western U.S. Midwest, said Paul Markert, a meteorologist with EarthSat Weather Services Cropcast.

 

The gains in wheat helped underpin corn, said Steve Bruce, a corn broker with Man Financial. There are concerns about the spring wheat crop and some quality concerns with the soft red crop as well, he added.

 

Corn is very oversold and the midday outlooks helped bring some short covering into the market, a floor analyst said.

 

In addition, some participants are squaring their positions before the U.S. Department of Agriculture reports on Friday, he added.

 

The USDA is scheduled to release its June acreage and quarterly stocks reports at 7:30 a.m. CDT (1230 GMT) Friday.

 

The average of 20 analysts surveyed by Dow Jones Newswires expect U.S. corn acreage at 79.797 million acres, above the 78.019 forecast by the USDA in March, but below the 81.759 million planted in 2005.

 

The average of 13 analysts surveyed expect quarterly U.S. corn stocks at 4.362 billion bushels, little changed as compared to the 4.321 billion in June 2005.

 

A slightly better-than-expected increase in corn crop conditions Monday afternoon had little impact on the market, with one trader noting the conditions usually peak ahead of pollination.

 

Among buyers Tuesday were Calyon Financial, which bought 1,000 December, Man Financial bought 200 September and 1,600 December, RJ O'Brien bought 500 December, O'Connor bought 400 December, and Fimat bought 500 December and 300 July.

 

Sellers Tuesday included O'Connor, which sold 1,200 December, RJ O'Brien sold 1,000 December and 600 September, Fimat sold 1,000 December, ABN Amro sold 1,000 December and ADM sold 800 December.

 

Overall commodity fund buying was estimated at 2,000 contracts.

 

In options trading, Merrill Lynch bought 5,000 December US$2.70 calls.

 

Oat futures settled higher. July reached a new contract high as a firm nearby cash market lifted July and helped support the deferred contracts, a floor analyst said.

 

July oats jumped 6 1/2 cents higher to US$2.10 per bushel and December rose 4 cents to US$1.96 3/4.

 

Ethanol futures ended lower in quiet trade. The July contract declined 14 cents to US$3.54 per gallon with the August contract down 13 cents to US$2.95.