July 25, 2007

 

CBOT Corn Review on Tuesday: Settles higher on wheat spilover

 

 

Chicago Board of Trade corn futures settled higher Tuesday as prices mirrored the wheat market and found support in lower-than-expected U.S. crop ratings, analysts said.

 

September corn ended up 1 1/2 cents at US$3.11 1/2 per bushel, December settled 1 1/4 cents higher at US$3.26 3/4, and March closed 1 1/4 cents higher at US$3.42.

 

Corn was a follower of wheat prices in Tuesday's session, shadowing its moves up and down, analysts said.

 

"When you look at what's taken place in the wheat market, it's kind of hard to ignore," said grain analyst Shawn McCambridge with Prudential Financial. Wheat prices were strong Tuesday on support from deteriorating conditions in Europe's wheat crop and record high European wheat prices, traders said. September wheat gained 21 3/4 cents to settle at US$6.42 Tuesday.

 

Spillover support was strengthened with lower-than-expected U.S. corn crop conditions released Monday, analysts said.

 

"When we came into the session today we had a decrease in crop ratings, which gave us a little bit of support," McCambridge said. The U.S. corn crop lost two percentage points in its condition rating from last week, falling to 62% in good-to-excellent condition, the U.S. Department of Agriculture said in its weekly crop progress report. The decline was unexpected after beneficial rains and cooler temperatures in the Midwest last week, analysts said.

 

After recent loses, the corn market was due for a bounce from oversold conditions, McCambridge said. Prices reached a nine-month low in Dec and gapped lower on the daily technical charts Monday.

 

The midday weather report did not change dramatically from the overnight forecast calling for average temperatures and rainfall this week, a floor manager said. T-storm Weather's midday forecast predicted thunderstorm activity from eastern Minnesota through Wisconsin, southern Michigan, northern Indiana and Ohio from Friday through Saturday. Rain chances were to extend through into next week in the eastern corn belt, T-storm weather said.

 

However, a second midday weather model predicted rains over the eastern Midwest staying north and dropping less moisture on the corn belt than the overnight forecasts predicted, an analyst said.

 

The U.S. corn crop is mostly through its pollination stage and therefore will rely less on good growing conditions and more on soybean spillover, a floor manager said.

 

In open auction trading, Tenco bought 1,600 September and Rand Financial sold 500 December.

 

In options trading, FC Stonnee bought 2,500 September US$3.40 puts and sold 2,500 September US$3.50 puts. Tenco sold 4,000 December US$3.70 puts.

 

Commodity fund buying was estimated at 5,000 contracts. CBOT oat futures settled higher Tuesday after fund buying in December and spillover from higher grain markets supported prices, a trader said.

 

Sep oats ended up 12 cents at US$2.51 per bushel, and Dec also gained 12 3/4 cents at US$2.57 3/4.

 

Ethanol futures finished lower in light trade. August ethanol settled 2.3 cents lower at US$1.940 per gallon and September ended 3.5 cents lower at US$1.860.