July 17, 2007

 

CBOT Corn Review on Monday: Settle limit down on weather forecasts

 

 

Chicago Board of Trade corn futures settled sharply lower Monday with the nearby months settling at their lower level price limits on favorable near-term weather forecasts, reversing most of the gains set last week on predictions of hot and dry weather in mid-to-late July.

 

September corn dropped 20 cents to US$3.34 3/4, December fell 20 cents to US$3.48 1/2 and March also lost 20 cents to US$3.61 3/4.

 

"It was all about the weather," an analyst said. Weather forecasts over the weekend and Sunday night pointed toward more moderate conditions and better chances for rainfall this week and the market sold off sharply, the analyst said.

 

"The price declines were clearly related to the change in the forecasts from late last week, which had pointed to the possibility of a hot, dry pattern for the latter half of July and the first part of August," said Bill Nelson, a grain analyst and meteorologist with AG Edwards & Sons.

 

Midday weather updates didn't change appreciably from the earlier outlooks, keeping futures trading at their lower limit levels in the first three months.

 

Weather models at midday indicated a wet weather pattern for eastern Iowa through northern Illinois possibly extending into Indiana and Ohio as well, said T-storm Weather in a note to clients.

 

At the close, there were over 33,000 contracts offered for sale in December on e-cbot, pointing toward a lower opening Monday night, a trader said.

 

In options trading, synthetic futures predict December corn to open 2 to 2 1/2 cents lower Monday night.

 

Price direction on Tuesday will be "weather-centric," with price direction depending on the forecast, an e-cbot trader said.

 

On day session technical charts electronically traded December settled below its 10-day moving average for the first time in five sessions and at its lowest level since July 5.

 

In open auction trading, Tenco bought 1,000 September and Fimat bought 1,000 December while Kottke sold 500 September.

 

Commodity fund selling was estimated at 6,000 contracts.

 

In options trading, Tenco bought 3,000 December US$3.20 calls and sold 6,000 December US$3.10 puts.

 

Oat futures settled sharply lower and near limit down levels as spillover selling from the rest of the grain floor pulled down prices, a floor trader said. Oats followed the rest of the floor, he said.

 

September dropped 18 cents to US$2.51 per bushel and December fell 18 1/2 cents to US$2.55 1/4.

 

Ethanol futures settled lower in thin trade. August ethanol fell 2.3 cents to US$1.996 per gallon and September slipped .001 cent to US$1.920.

 

The U.S. Department of Agriculture is scheduled to release the weekly crop progress report at 4:00 p.m. EDT (2000 GMT).