July 4, 2007

 

CBOT Corn Review on Tuesday: Down on weather forecasts, speculative selling

 

 

Chicago Board of Trade corn futures settled lower Tuesday, dragged down by weather forecasts favorable to crop development and speculative selling, analysts said.

 

July corn fell 10 1/2 cents to US$3.20 per bushel, Sep declined 11 1/4 cents to US$3.28 1/2, and Dec lost 12 cents to US$3.38

 

Weather premium continues to exit the market and corn was weaker as a result, a commission house analyst said.

 

Commodity fund selling was estimated at 8,000 contracts.

 

Trading was fairly active ahead of the Independence Day holiday, a floor trader said.

 

The Chicago Board of Trade will be closed Wednesday for the holiday.

 

There is no weather threat in the market right now, and the market is dialing in a lot of bearish news, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

Midday weather forecasts were mostly unchanged from earlier forecasts, though some forecasters increased the chance of rain in their 6-to-10 day outlooks, a commission house analyst said.

 

December corn has lost almost US$1.00 per bushel from its high set just over two weeks ago. "This is the biggest 12-day price break in the history of corn," Roose said. However, if the weather turns hot and dry, that could change the bearish sentiment in a hurry, he said.

 

Crop conditions were unchanged from the previous week, the U.S. Department of Agriculture reported Monday afternoon, within analyst expectations. Seventy-three percent of the crop was rated in good-to-excellent condition with 13% of the crop reported silking, up from the five-year average of 9%.

 

Spillover selling from soybeans also added to the downside, a trader said. November soybeans settled 15 1/2 cents lower at US$8.82.

 

The recent losses have left corn extremely oversold, Roose said.

 

Thursday's price direction still hinges on the overnight weather forecasts with corn's pollination period still ahead for the crop, an analyst said.

 

On day session technical charts electronically traded December remained below its major moving averages and traded at its lowest level since Nov. 1.

 

In open auction trading, FC Stonnee sold 1,600 December and Tenco sold 1,500 December.

 

In options trading UBS bought 15,000 December US$3.00 calls and Tenco bought 2,000 December US$3.60 calls and sold 4,000 December US$3.10 puts.

 

Oat futures ended mixed in light trading with the July contract supported by the lack of deliveries posted against it, a trader said. Commodity funds were on both sides of the market limiting the upside and downside in the deferred months, he added.

 

July oats settled 2 cents higher at US$2.93 per bushel and December rose 1 cent to US$2.68.

 

Ethanol futures settled slightly lower in modest activity. July ethanol fell 1.5 cents to US$1.975 per gallon and August declined 2.2 cents to US$1.918.