July 24, 2007

 

CBOT Corn Review on Monday: Lower on fund liquidation, weather

 

 

Chicago Board of Trade corn futures settled lower Monday, pressured by speculative selling as near-term U.S. Midwest weather conditions enticed funds into liquidating length from the market, traders said.

 

September corn ended 8 1/4 cents lower at US$3.10 per bushel, December was 8 cents lower at US$3.25 1/2, and March was down 6 1/2 cents at US$3.68 1/2.

 

"What we're seeing is some continued long liquidation from the funds," said John Kleist, grain analyst with Kleist Consulting.

 

Midday weather forecasts confirming earlier predictions of average-to-cooler temperatures and increased rainfall in the U.S. Midwest through the end of this week contributed to Monday's price decline, traders said.

 

"End-of-season weather is a lot better than anyone was predicting," Kleist said.

 

Adding to the bearish sentiment was the expected increase in U.S. corn crop condition ratings and lower-than- expected weekly export inspections.

 

T-storm Weather's midday forecast said "significant rainfall should develop during the end of the week across portions of the Plains and corn belt. Most areas of the corn belt should receive some moisture in the next five to seven days, T-storm reported.

 

In Friday's commitments of traders data from the CFTC, funds continue to hold their net long corn position, futures and options combined. In the week ended July 17, funds were net long 134,704 contracts. Commercials remain net short 36,199 contracts. In the agency's supplemental report, index traders are heavily net long still, at 365,098 contracts, having added 4,282 long contracts and 714 shorts.

 

On Monday afternoon at 4 p.m. EDT, the U.S. Department of Agriculture is scheduled to release its weekly crop progress report. U.S. corn crop ratings are expected to see an increase of 1-2 percentage points from last week in the overall good-to-excellent rating, a floor manager said.

 

The USDA reported Monday 35.728 million bushels of corn were inspected for export in the week ended July 17. The export figure is down 16.1% from the previous week's 42.571 million bushels. Analysts surveyed by Dow Jones Newswires projected the inspections to fall within a range of 38 million to 43 million bushels. Accumulated corn inspections totaled 1.816 billion bushels, up 1.8% from the 1.784 billion bushels reported at the same time last year.

 

In open auction trading, Tenco bought 600 September and FC Stonnee sold 500 December.

 

In options trading, Prudential bought 2,500 December US$4.50 calls. RJ O'Brien bought 2,000 December US$3.20 calls and sold 2,000 December US$3.60 calls and 2,000 December US$3.20 puts. Man Financial also sold 2,000 December US$3.80 puts.

 

Commodity fund selling was estimated at 4,000 contracts.

 

On daily technical charts, the most active December 2007 contract traded at its lowest level since Oct. 23, 2006.

 

CBOT oat futures ended mixed Monday as fund buying in electronic trade supported prices near US$2.45 in December and offset light selling from earlier in the session, a floor trader said.

 

September oats ended down 1 cent at US$2.39 per bushel, and December gained 1 1/4 cents to US$2.45.

 

Ethanol futures finished lower in light activity Monday. August ethanol settled 4.6 cents lower at US$1.963 per gallon and September ended down 4.8 cents at US$1.895.