July 13, 2007

 

CBOT Corn Review on Thursday: Rallies on weather forecasts, soybeans

 

 

Chicago Board of Trade corn futures ended higher Thursday, disregarding a higher-than-expected new crop carryover in the U.S. Department of Agriculture's supply and demand report as longer-term weather forecasts and another rally to new contract highs in soybeans and soymeal pushed prices higher, analysts said.

 

July corn rallied 8 cents to US$3.44 per bushel, September gained 8 1/2 cents to US$3.51 1/2, and December rose 9 3/4 cents to US$3.65 1/4.

 

The USDA forecast 2007-08 corn carryover at 1.502 billion bushels, well above the average analyst estimate of 1.418 billion and the June estimate of 997 million bushels. The 2006-07 carryover stocks were pegged at 1.137 billion bushels, higher than the 987 million bushels estimated in June.

 

Once the acreage report was released last month, corn returned to its traditional role of a follower of the other grains, said Dale Durchholz, an analyst with AgriVisor.

 

The USDA's supply/demand report was slightly negative but the market had anticipated that the carryover would be large, he said.

 

Corn is oversold and participants Thursday liquidated some of their short positions given the longer-term weather forecasts, Durchholz said.

 

Corn benefited from the continued rally in soybeans and soymeal as well as the hot, dry forecast in the longer-term midday weather outlooks, a commission house analyst said. November soybeans gained 18 3/4 cents to US$9.41 1/2 and August soymeal rose US$7.30 to US$253.70.

 

A major heat event is possible beginning late next week with limited rain chances and intense heat, meteorological firm T-storm weather said in a note to clients at midday Thursday.

 

Price direction Friday depends on the overnight weather forecasts and the direction of soybeans, a trader said.

 

On day session technical charts, electronically December settled above its 10-day moving average and at its highest level since June 26.

 

In open auction trading, Fimat bought 700 December and JP Morgan bought 600 December. Fortis sold 3,500 December and Rand sold 500 March.

 

In options trading, Man Financial bought 3,000 December US$5.50 calls and sold 1,000 March US$5.00 calls. FC Stonnee sold 2,000 December US$4.00 puts.

 

Oat futures finished higher in modest trade as spillover strength from corn futures supported prices, an analyst said.

 

July oats gained 1 cent to US$2.90 per bushel, September rose 2 1/2 cents to US$2.70, and December ended up 2 1/4 cents to US$2.73 1/4.

 

Ethanol futures settled mixed in very light trade. August ethanol gained 2.7 cents to US$1.999 per gallon and September declined 1 cent to US$1.90.