June 30, 2009

Most traders are expecting light deliveries against the July CBOT corn contract on first notice day Tuesday (June 30), although estimates vary widely.

 

Estimates for deliveries against the July contract range from zero to 1,000. Most traders are expecting a low number, and said it's possible there would be no deliveries.

 

"I don't think the people who own the stocks are going to want to give them up," said Vic Lespinasse, analyst for grainanalyst.com.

 

There are only 18 receipts registered, traders and analysts said.

 

Uncertainty over the state of this year's crop, both in terms of plantings and yield, should limit deliveries, analysts said.

 

"End-users are reluctant to give up any contracts until they have a better handle on what corn acreage is for this year," said Arlan Suderman, analyst for Farm Futures.

 

"What if the corn acreage number comes in well below expectations? Then old crop supplies become of greater value," he added.

 

But a floor trader noted that the July-September spread has narrowed recently, from 11 cents to 7 1/2 cents on Monday. This could prompt some deliveries, although he does not expect many.

 

The spread is "certainly not paying" for storage, Suderman said. "It wants the bushels on the market."

 

A floor trader is expecting deliveries to be soft, but said there are arguments for both sides.

 

"It's not like you're swimming in corn," a trader said. "But demand isn't very strong right now.

 

Traders and analysts said that with the USDA releasing key acreage and quarterly stocks reports Tuesday at 8:30 a.m. EDT, the delivery total could get lost in the shuffle.

 

"They are important, but tomorrow there are bigger things going on," Lespinasse said.