July 18, 2006

 

CBOT Corn Review on Monday: Lower on weather outlook

 

 

Corn futures at the Chicago Board of Trade settled lower Monday in bearish response to confirmation of mild forecasts that are expected to bring rain and cooler temperatures to the Midwest, analysts said.

 

September futures closed 9 cents lower at US$2.51 3/4 per bushel, and December futures lost 8 3/4 points, closing at US$2.68.

 

"Cooler temperatures take the stress off crops, even when they're lacking moisture on the surface," said Bill Nelson, analyst for A.G. Edwards. This forecast shows a bearish outlook, he added.

 

Nelson said forecasts showed rain in the 2-3-day outlook for Minnesota, Wisconsin, Iowa and northern Illinois before the front pushes southward. Temperatures in the Midwest are predicted to be cooler for the next 6-10 days with light to moderate rainfall of 1/4-1 1/2 inches, he said.

 

On the technical side, active contracts penetrated key underlying support levels. The December contract fell to its lowest level since July 7, falling through its 50-day moving average.

 

Meanwhile, market focus is expected to shift to the upcoming U.S. Department of Agriculture crop conditions report, due Monday afternoon, analysts said. Some analysts have mixed expectations for the report, predicting a decline of 1-3 percentage points in the good-to-excellent-rated corn crop. Other analysts expect improvements in eastern Midwest corn to offset declines in the western Midwest, possibly leaving the numbers unchanged to higher.

 

USDA reported corn inspected for export for the week ended July 13 totaled 45.070 million bushels, compared to 36.339 million inspected last week. Year-to-date, 1.730.1 billion bushels have been inspected, compared to the 1.490 billion last year.

 

Buyers on Monday included Goldenberg-Hehmeyer buying 2,000 December. FCStonnee bought 1,200 December, and UBS and FIMAT each bought 1,000 December. Sellers Monday included JP Morgan, which sold 2,500 December. CStonnee sold 1,700 December.

 

CBOT oat futures closed lower Monday in sympathy with corn. Traders noted fund selling in the September contract on the opening, but activity slowed for the remainder of the day as the speculative trading was exhausted. The most-active December contract closed 5 1/2 cents lower at US$1.97 1/2 per bushel and September futures closed at US$1.99 1/2.

 

Ethanol futures closed mixed after light trade on the CBOT Monday. August contracts slipped 1 cent to US$3.00 per gallon and September futures rose 2 ½ cents to US$2.74.