July 21, 2006

 

CBOT Corn Review on Thursday: Down on weather, late fund selling

 

 

Corn futures at the Chicago Board of Trade settled modestly lower Thursday, ignoring good gains set in wheat features as early fund buying dissipated and midday weather forecasts were viewed bearishly, floor analysts said. September corn fell 2 1/4 cents to US$2.42 1/2, and December lost 2 1/2 cents at US$2.59 1/4.

 

Fund activity was a major factor in the session, with fund buying supporting the market early on before reversing and ending as light sellers on the day, sources added.

 

The reversal of fund positions from early buying to selling late in the session weighed on the market, said Vic Lespinasse of A.G. Edwards & Sons.

 

Midday weather outlooks also helped move the market lower as forecasts of rain and cooler temperatures pressured the market.

 

Weather forecasts for the short term will see rains continue to shift their focus southward, said Joel Widenor, manager of EarthSat Weather Services' Cropcast. Southern sections of the Ohio Valley and southern Nebraska are predicted to see 45% coverage with 1/4-1 1/4 inches heavier locally. Within the next 4 days, the cooldown in the Midwest will carry through far southwestern areas of the corn belt, said Widenor.

 

In the 6-10 day forecast, precipitation will be focused in the northern and eastern parts of the corn belt with 1/2-2/3 of the region seeing normal rainfall, while the southwest will be below average precipitation, he said. Midwest temperatures are forecast mostly above normal in the upper 80s and mid-90s.

 

"We can't rule out the fact that we could see triple digits, said Widenor.

 

Fund selling was estimated at 1,500 contracts.

 

Buyers Thursday included Merrill Lynch, which bought 2,000 December, Goldenbeg-Hehmeyer bought 2,000 December, Tenco bought 1,5000 December and Fimat bought 1,000 December.

 

Sellers Thursday included ABM Amro, which sold 1,500 December, Fimat sold 1,500 December, Rand Financial sold 1,500 December, JP Morgan sold 1,000 December, Goldberg-Hehmeyer sold 1,000 December and Man Financial sold 1,000 December.

 

The U.S. Department of Agriculture reported U.S weekly corn export sales at 632,600 metric tonnes for 2005-2006 season in the week ended July 13. Analysts had estimated 550,000-800,000 metric tonnes of corn would be reported. The largest buyers were Egypt, Taiwan and the Korean Republic.

 

Oat futures settled higher after following wheat most of the day, a floor trader said. He noted that funds sold December on the opening and bought the same contract near the close. September oats rose 6 1/2 cents to US$2.25 per bushel and the December contract gained 1 cent at US$2.06.

 

Ethanol futures settled mixed in light trade, the August contract down 4 cents to US$2.88 per gallon and the September contract added on 1 cent at US$2.71.