July 19, 2006

 

CBOT Corn Review on Tuesday: Down on technical, fund sales, wet forecast

 

 

Corn futures at the Chicago Board of Trade finished lower Tuesday as early technical based follow through selling from Monday's weak close and fund selling pressured prices early in the session with additional pressure coming from wetter midday forecasts, sources said.

 

September corn settled 5 1/4 cents lower at US$2.46 1/2 per bushel, and December declined 5 1/2 cents at US$2.62 1/2.

 

Early in the session, the market moved lower as technical weakness thought to be spillover from Monday and fund selling kept the market on the defensive, a floor analyst said.

 

Midday forecasts predicting wetter near term weather and a wetter outlook in the extended forecast pushed prices to their lows of the session, he added.

 

There are some areas in the northern and southern U.S. Midwest that are predicted to receive rain in the next several days, said Bill Nelson, associate vice president and meteorologist with AG Edwards & Sons in St. Louis.

 

In addition, longer range midday maps are indicating wetter conditions in the 10-14 day outlook than previously forecast, he added.

 

The market had little reaction to the one percentage point decline in the good-to-excellent category in the weekly crop conditions report released Monday afternoon.

 

The U.S. Department of Agriculture reported that 62% of the US corn crop was in good-to-excellent condition, down one percentage point from last week and within the 1-3 percentage point decline expected by analysts.

 

On day-only technical charts, December ended below most major moving averages and filled on the downside an upside gap created between June 30 and July 3. December settled at its lowest level since June 30.

 

Buyers Tuesday included JP Morgan, which bought 2,000 December, FC Stonnee bought 500 December and 300 September, ABN Amro bought 500 December and 500 September and Tenco bought 500 December and 400 March.

 

Sellers Tuesday included Man Financial, which sold 2,000 December, JP Morgan sold 2,000 December and 500 September, Prudential sold 1,000 December, Shatkin sold 1,000 December and Rand Financial sold 800 December.

 

Overall fund selling was estimated at 8,000 contracts.

 

Oat futures settled mostly higher as light fund buying supported the September while fund selling weighed on the December, a floor trader said. The back months were supported by the March and July 2007 contracts trading with overall volume moderate, he said.

 

September oats gained 2 1/4 cents to US$1.99 3/4 per bushel while December contract rose 3/4 cent to US$2.00 1/4.

 

Ethanol futures ended mixed. The August contract fell 4 cents to US$2.96 per gallon and the September contract ended unchanged at US$2.74.