July 12, 2006

 

CBOT Corn Review on Tuesday: Up on weather outlook,weaker crop ratings

 

 

Corn futures at the Chicago Board of Trade settled at higher levels Tuesday, drawing support from forecasts for hotter weather to move into the U.S. Midwest this weekend and weaker-than-expected crop ratings in Monday's U.S. Department of Agriculture's crop progress report, sources said.

 

July corn rose 6 cents to US$2.53 3/4 cents per bushel and the December contract settled 6 3/4 cents higher to US$2.79 1/4. December finished at its highest level since June 5.

 

The crop is entering its pollination phase and the hot, dry weather could impact its ability to pollinate, a floor source added.

 

Conflicting weather forecasts had little impact on the market's tonnee, a commission house analyst said.

 

The midday forecasts showed little change for the balance of this week, said Bill Nelson, meteorologist and associate vice president of AG Edwards & Sons in St. Louis. For the first part of next week, however, the midday maps forecast a cold front to develop in the northwestern Midwest early next week, bringing a break in the heat expected through the end of this week, he added.

 

The midday forecasts were mixed and the market was not interested in selling ahead of the report with a mixed weather outlook, the commission house analyst noted.

 

The market also drew early support from Monday's weaker- than-expected crop conditions report, the analyst said.

 

The U.S. Department of Agriculture reported Monday that 63% of the U.S. corn crop was in good-to-excellent condition, down five percentage points from last week's 68% rating. Analysts had expected a decline of one to three percentage points.

 

Leading the declines was Minnesota, which reported a 12 percentage-point drop from 81% to 69% in the good-to-excellent category. Iowa's ratings fell by 9 percentage points in that category, and Illinois' good-to-excellent ratings declined by 7 percentage points.

 

The USDA said 23% of the crop was silking, compared to 24% in 2005 and the five-year average of 20%.

 

On Wednesday, the USDA is scheduled to release the July supply and demand report at 7:30 a.m. CDT (1230 GMT).

 

An average of 15 analysts surveyed by Dow Jones Newswires estimated 2005-06 ending stocks at 2.104 million bushels, 72 million bushels lower than the 2.176 billion bushels the USDA estimated in June.

 

An average of 16 analysts surveyed estimated 2006-07 ending stocks at 1.266 billion bushels, 175 million bushels higher than the 1.091 billion estimated by the USDA in June.

 

On technical charts, December gapped open higher on day- only technical charts and settled above most major moving averages.

 

Buyers Tuesday included JP Morgan, which bought 2,000 December, Calyon Financial bought 1,500 December, FC Stonnee bought 1,500 December, ADM bought 1,000 December, Rand Financial bought 1,000 December and UBS bought 1,000 December.

 

Sellers Tuesday included Merrill Lynch, which sold 3,000 December, Goldenberg-Hehmeyer sold 3,000 December, JP Morgan sold 1,000 December and 700 September, Rand Financial sold 1,300 December, and FC Stonnee sold 1,000 December.

 

Overall commodity fund buying was estimated at 5,200 contracts, with commercial-related selling estimated at 5,000 contracts.

 

Oat futures settled higher as light fund buying extended the recent rally, a floor trader said. New life-of-contract highs were set in several months, he added.

 

July oats settled 2 1/4 cents higher at US$2.31 1/2 per bushel and the December contract gained 2 1/2 cents to US$2.07.

 

Ethanol futures ended mostly higher in thin trade. The August contract rose 15 cents to US$2.88 per gallon and the September contract gained 15 cents to US$2.55.