June 29, 2006

 

CBOT Corn Review on Wednesday: Higher; weather forecast cuts gains

 

 

Chicago Board of Trade corn futures ended higher Wednesday but below levels set earlier in the session, as the midday weather forecast was viewed as less supportive to prices, floor sources said.

 

July corn rose 3/4 cent to US$2.26 per bushel and December also gained 3/4 cent to US$2.52.

 

Fund buying and position squaring ahead of the USDA planting and grain stocks reports on Friday helped provide strength to the market, floor sources said.

 

Early weather forecasts expecting hotter and drier weather in parts of the U.S. Midwest than previously predicted also added to the early gains, they noted.

 

However, moderately weaker wheat futures and midday forecasts that added in additional chances for rain early next week with less heat expected in the longer term outlook helped trim the gains, a floor trader said.

 

September wheat futures fell 6 1/2 cents to US$3.88 per bushel.

 

The midday forecasts were a little friendly for rain next week and the longer-term forecasts were less ominous than previously expected at the end of the 14-day period, said Bill Nelson, associate vice president with A.G. Edwards & Sons in St. Louis.

 

There was not much interest in selling corn ahead of the reports, a commercial connected analyst noted. Everyone expects the corn acreage to be higher Friday, but what if it's not, he noted.

 

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 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.

 

On technical charts, December corn gapped open higher and filled in on the upside a downside gap created between Friday and Monday's trade. December corn settled below most major moving averages.

 

Buyers on Wednesday included Man Financial, which bought 1,600 December. Fimat bought 1,000 September and 500 December, UBS bought 1,000 December, FC Stonnee bought 500 December and 400 July and Rand bought 500 December.

 

Sellers Wednesday included JP Morgan, which sold 600 December. Fimat sold 800 December, ABN Amro sold 400 December and RJ O'Brien sold 400 July.

 

Overall commodity fund buying was estimated at 7,500 contracts.

 

In spread trading Merrill Lynch bought 2,000 December-July.

 

Oat futures ended lower as ideas of improving weather conditions in Canada's oat growing regions helped keep a lid on the market, a commercial connected analyst said.

 

July oats fell 3 1/4 cents to US$2.06 3/4 per bushel and December declined 3 1/2 cents to US$1.93 1/4.

 

Ethanol futures settled lower in thin trading. The July contract fell 15 cents to US$3.39 per gallon with the August contract falling 6 cents to US$2.89.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report the week ended June 22. Last week, corn export sales were 1,815.9 million metric tonnes.