June 28, 2007

 

CBOT Corn Review on Wednesday: Sharply lower on technical selling, weather

 

 

Chicago Board of Trade corn futures finished sharply lower Wednesday, pressured by bearish weather forecasts for next week and technical selling, analysts said.

 

July corn settled 12 3/4 cents lower at US$3.43 3/4 per bushel, September dropped 13 3/4 cents to US$3.53 3/4, and December fell 13 cents to US$3.62.

 

The forecast for better weather next week helped pressure corn, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D. Expectations that corn acreage could be larger than expected in Friday's USDA acreage report also led participants to take premium out of the market, he said.

 

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 sharply higher than the 78.327 million planted in 2006.

 

Technical liquidation pushed corn lower as participants exited losing positions, an analyst said.

 

December corn has fallen almost 70 cents from the high reached last week.

 

There were no major changes to the midday outlooks from previous forecasts, and that encouraged additional technical liquidation, a commission house analyst said. There was scattered rain all over the U.S. Midwest Wednesday, the analyst added.

 

Rain is expected in parts of the eastern U.S. Midwest through Friday with cooler temperatures forecast for next week, several weather forecasters said.

 

Several contract months fell below their 200-day moving averages for the first time since last fall.

 

A reversal in wheat futures to modest losses from earlier gains added to the weak tonnee with corn having no feature to support prices, a trader said.

 

Corn should see some position squaring Thursday after the losses seen this week and ahead of the acreage and stocks reports on Friday, said Joe Bedore, floor manager with FC Stonnee.

 

On daily technical charts, July, September and December finished below their 200-day moving averages with July trading at its lowest level since October.

 

In open auction trading, JP Morgan bought 1,500 December and sold 1,000 December, Tenco bought 1,000 July and Fortis sold 500 July.

 

Commodity fund selling was estimated at 12,000 contracts.

 

In options trading, UBS bought 2.000 December US$4.50 calls and JP Morgan bought 1,000 December US$4.50 calls and sold 1,000 December US$4.10 calls.

 

Oat futures settled lower as fund selling pressured prices, a trader said. Oats also came under pressure from corn and wheat as "oats joined the selling parade" with the other grains, he said.

 

July oats declined 2 1/2 cents to US$2.60 1/2 per bushel and December dropped 7 1/2 cents to US$2.66.

 

Ethanol futures finished mostly lower in light activity. July ethanol fell 1.4 cents to US$1.92 per gallon and August ended down 2.3 cents to US$1.895.

 

The weekly export sales report is due Thursday at 8:30 a.m. EDT (1230 GMT). Analysts expect corn sales between 550,000 and 1.1 million metric tonnes for the week ended June 21.