June 30, 2009

 

CBOT Corn Review on Monday: Eased on weather, positioning before reports

 

 

Chicago Board of Trade corn futures closed lower Monday as favorable crop weather forecasts and anticipation of key agricultural reports hung over the market.

 

July closed down 7 1/4 cents at US$3.77 per bushel and December closed down 7 1/4 cents at US$3.97 1/4.

 

The market opened weaker but dipped to fresh two-month lows midday, with the July contract touching US$3.76. The market trimmed losses modestly to close slightly weaker.

 

The market has been awaiting the U.S. Department of Agriculture's acreage and quarterly grain stocks reports, which will be released Tuesday at 8:30 a.m. EDT. Traders and analysts said they were anticipating positioning today ahead of the report, but as the market dipped midday, an analyst said he thought a "shift in psychology" had occurred and the market was starting to track neighboring markets.

 

"I don't think wheat or beans allowed [positioning,]" said Mike Zuzolo, senior analyst for Risk Management Commodities, citing both markets' slumps.

 

The trade's average guess for seeded corn acres is about 84.158 million acres, a reduction of the USDA's March estimate of 84.986 million acres. Joel Karlin, sales manager and commodity sales coordinator at Western Milling, said the trade's estimate is a negative forecast.

 

"If we only come down that much, it could be negative," Karlin said.

 

A floor trader said that "it seemed like the market was trading increased acreage today."

 

Traders and analysts said the crop weather forecasts look benign. A T-storm Weather forecast said heat will not occur in most areas of the corn belt this week, except for central Missouri through southern Illinois. The forecast said areas that become hottest have the best chance for rain, but most areas should be dry through Friday. Depending on the position of two storm systems next week, either a cooler pattern will continue in the central U.S., or warmer to hot weather will return.

 

"Weather continues to be the most influential factor for the market and for right now, it's a negative feature," said Karlin.

 

The USDA will release its weekly crop progress report Monday afternoon. Floor traders said the good-to-excellent rating is expected to be steady to two percentage points lower than last week because of recent hot weather through the corn belt. The most recent crop progress report pegged 70% of U.S. crops as good-to-excellent through June 21. One trader noted that condition ratings seasonally start to dip a bit this time of year.

 

In export news, the USDA on Monday announced private export sales of 118,000 metric tonnes of corn for delivery to unknown destinations. Of that total, 58,000 tonnes are for delivery in the 2009-10 marketing year and 60,000 tonnes are for delivery in the 2008-09 marketing year.

 

The USDA also announced Monday a change in destination update for 232,000 metric tonnes of U.S. corn exports, saying it will be delivered to South Korea. Previously, the exports were listed as going to unknown destinations. Of the 232,000-tonne total, 116,000 tonnes are for delivery in the 2009-10 marketing year and 116,000 tonnes are for delivery in the 2008-09 marketing year.

 

CBOT oats ended higher. July oats were up 4 1/2 cents at US$2.13 1/2 per bushel, and September also closed up 4 1/2 cents at US$2.23.

 

Ethanol futures ended mostly lower. July ethanol closed up US$0.015 at US$1.693 per gallon, and December was US$0.002 lower at US$1.638.