June 30, 2007

 

CBOT Corn Review on Friday: Mixed; Acreage report weighs on nearby months

 

 

Chicago Board of Trade corn futures settled mixed Friday with the nearby contracts retreating on the higher-than-expected 2007 corn planted acreage estimate from the USDA, technical selling and long liquidation, analysts said.

 

July corn fell 10 cents to US$3.29 1/2 per bushel, September also declined 10 cents to US$3.40, and December fell 7 1/2 cents to US$3.50 3/4.

 

"The acreage report and the near term weather conditions has turned market sentiment from a supply-rationing stance to a potential burdensome supply situation in 2007-08," said Shawn McCambridge, senior grain analyst at Prudential Financial.

 

In addition, corn breached technical support levels which led to liquidation from long-term market bulls, he added.

 

The U.S. Department of Agriculture reported 2007-08 corn planted acreage at 92.888 million acres, well above the 90.454 million estimated in March and the average analyst estimate of 90.585 million. This is the largest amount of corn planted since 1944, the USDA said.

 

The government also estimated quarterly corn stocks as of June 1 at 3.534 billion bushels, above the average analyst estimate of 3.467 billion bushels, but below the 4.362 billion bushels on June 1, 2006.

 

"No one was looking at the stocks numbers, it was all about the acreage report," said Joe Bedore, floor manager with FC Stonnee. "When people saw the increase in acreage, the stocks number faded into the background," said Bedore.

 

Corn trimmed its losses near the close on month-end and quarter-end position squaring, but late weakness in wheat limited the upside, a floor analyst said. December wheat settled 22 1/2 cents lower at US$6.10 1/2.

 

Since reaching its life-of-contract high on June 18, December corn has declined over 84 cents.

 

Several 2008 contracts were higher as the acreage numbers have highlighted the continuing battle for acreage among corn, wheat and soybeans, said Mike Zuzolo, chief analyst at Risk Management Commodities.

 

Market direction Monday will depend upon the Sunday night forecasts with the market sensitive to any potential problem as corn is near its crucial pollination period, a commission house analyst said.

 

On day session technical charts, electronically traded December corn traded an outside day, above and below the highs and lows set Thursday and finished below its major moving averages.

 

Commodity fund selling was estimated at 15,000 contracts.

 

In open auction trading, RJ O'Brien bought 1,000 December, Fimat bought 1,200 December 2008 and JP Morgan sold 2,000 December.

 

In options trading JP Morgan bought 2,000 December US$3.60 puts and bought 3,600 December US$3.70 puts.

 

Oat futures settled mixed with spot month July supported by the lack of deliveries posted against it while deferred months came under pressure from spillover selling from the grain markets, an analyst said.

 

July oats rose 5 1/2 cents to US$2.78 1/2 per bushel and December fell 3 3/4 cents to US$2.65 1/4.

 

Ethanol futures ended flat in very light activity. July ethanol settled unchanged at US$1.95 per gallon and August also finished unchanged at US$1.90.

 

Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 11:00 a.m. EDT and the weekly crop progress report at 4:00 p.m. EDT (2000 GMT).