July 7, 2006

 

CBOT Corn Review Thursday: Higher on weather, technical, fund buys

 

 

Corn futures settled higher Thursday at the Chicago Board of Trade, underpinned by dryness concerns in the western U.S. Midwest, technical and fund buying, sources said.

 

July corn settled 5 3/4 cents higher at US$2.45 1/4 and December also rose 5 3/4 cents to US$2.70 1/4

 

"The market is overly sensitive to any glitches in the forecast and there is still conflict in the extended forecasts and the conflict was enough to get the funds back into the market," said John Kleist of Kleist Ag Consulting in Arlingtonne Heights, Illinois. It looks like the funds have regrouped on the forecast and it's a combination of some funds adding to their positions and some funds exiting out of short positions, he added.

 

Overall fund buying was estimated at 10,000 contracts.

 

In the short range forecast through Sunday and Monday, there is no real hot weather expected and there are some scattered showers in the southern and eastern portions of the U.S. Midwest in the period, said Joel Burgio, a meteorologist with DTN Meteorologix Weather. Temperatures in the western U.S. Midwest are expected in the range of upper 80's and low 90's Fahrenheit Saturday and Sunday and then it looks to cool off early next week, he said. Long range charts beyond 10 days show an upper ridge reforming over the Rockies and moving into the Central Plains, which would be a drier and hotter situation for the western Midwest, he added. The dryness in central and northern Iowa and southern Minnesota is a concern, Burgio added.

 

The bottom line is there is no rain in the forecast for the western belt, and until there is, corn should be well supported, a commission house analyst said.

 

Technical buying, with December trading above resistance at US$2.70, added to the gains sources said. December traded at its highest levels since mid-June.

 

Export inspections were released by the U.S. Department of Agriculture after being delayed several days due to computer problems and were 40.586 million bushels for the week ended June 29, within the range of analysts' estimates.

 

Buyers Thursday included Man Financial, which bought 4,000 December, Goldenberg-Hehmeyer bought 1,500 December, R.J. O'Brien bought 1,000 December, JP Morgan bought 1,000 December and ABN Amro bought 1,000 December.

 

Sellers Thursday included JP Morgan, which sold 2,000 December, Calyon Financial sold 800 December, O'Connor sold 500 December, Fimat sold 1,000 December and ABN Amro sold 600 December.

 

Oat futures settled higher as spillover strength from corn and light commission house buying supported prices, floor sources said. Light commercial related selling limited the gains in deferred months, they added.

 

July gained 2 1/4 cents to US$2.19 1/4 per bushel and December rose 1 3/4 cents to US$2.00 3/4.

 

December traded an inside day on technical charts between the highs and lows set on Wednesday finished lower in light trade.

 

Ethanol ended at modestly lower levels in quiet trade. The August contract declined 5 cents to US$2.77 per gallon and the September contract also fell 5 cents to US$2.50.

 

On Friday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended June 29. The report is delayed a day due to the holiday. Analysts expect sales between 1.0 and 1.4 million metric tonnes. Sales reported for the week ended June 22 were 2,027.6 million metric tonnes.