July 26, 2006

 

CBOT Corn Review on Tuesday: Closes slightly higher on weather

 

 

Chicago Board of Trade corn futures settled modestly higher Tuesday as bearish weather forecasts and spillover from wheat threatened to erase gains, floor sources said.

 

September corn futures closed 1/2 cent higher at US$2.39 1/2 per bushel and December settled 3/4 cent higher at US$2.56.

 

Earlier, corn traded higher as a 3 percentage-point drop in weekly U.S. Department of Agriculture crop conditions and a bullish overnight weather forecast supported the market. Gains were trimmed, however as midday weather forecasts predicted additional rain in the near term, sources said.

 

Forecasts for the week show chances for rain throughout the Midwest concentrated in the eastern sections of the region, said Drew Lerner, senior agricultural meteorologist at World Weather Inc. Temperatures are expected to be higher in the western corn belt than the east for the next two weeks, he said.

 

In the eastern corn belt, scattered showers are expected Wednesday through the end of the week with 0.3 inch-1 1/2 inches and locally heavier amounts possible, said Lerner.

 

"Everybody will get some rainfall in the eastern Midwest," he said.

 

Temperatures are expected to be in the mid 80s to lower 90s in the eastern corn belt for the rest of the week, he added.

 

In the western corn belt, scattered showers are possible with 50% coverage through Wednesday, followed by 1/2- to 3/4-inch coverage and locally heavier amounts across parts of the region Thursday through Sunday, Lerner said. Western Midwest temperatures are expected to be in the upper-80s to 90s for the remainder of the week, he said.

 

The drop in U.S. corn crop ratings also provided some support for the market, analysts said.

 

U.S. corn crop condition ratings fell 3 percentage points in the good-to-excellent category and are now rated 59% good to excellent for the week ended July 23, the USDA reported Monday. In Iowa, 62% of the crop is in good-to-excellent condition, up 4 percentage points, while in Nebraska 55% of the crop was rated in good-to-excellent condition, down 6 percentage points from last week.

 

Fund buying was a feature of the market early in the session, floor sources said.

 

Sellers Tuesday included ABN Amro, which sold 1,500 December, Goldberg-Hehmeyer sold 1,200 December, and O'Connor, which sold 1,000 September.

 

Buyers Tuesday included Citigroup, which bought 1,000 September and 2,000 December, O'Connor bought 2,000 September and 1,000 March, Fimat bought 1,000 December, Goldberg-Hehmeyer bought 1,000 December, and Man Financial bought 1,000 December.

 

Fund selling was estimated at 4,100 contracts.

 

Oat futures settled higher Tuesday on technical trading, a floor source said. The market made gains following corn early in the session and then followed corn as pressure was put on the market, he said.

 

September oats increased 2 3/4 cents to US$1.95 per bushel while December rose 4 cents to US$1.99 1/4.

 

Ethanol futures finished lower Tuesday as the August contract dropped 19.2 cents to US$2.608 per gallon and September lost 10 cents at US$2.61.