July 29, 2006

 

CBOT Corn Review on Friday: Slightly lower; weather uncertainties

 

 

Corn futures at the Chicago Board of Trade closed modestly lower in light choppy trade Friday as uncertainties about the weather provoked caution among traders, analysts said.

 

September corn futures settled 1/2 cent lower at US$2.37 1/4 and December declined 3/4 cent to US$2.53 1/2.

 

"As a consequence of conflicting weather, the market is content to move sideways for a while," said John Kleist of Kleist Agricultural Consulting.

 

Weather forecasts for a hot dry weekend and precipitation in the long term kept traders uncertain rain would develop, sources said.

 

"We just have to be patient and wait until Monday (forecasts are released) and then I think the market will move decisively," a floor trader said.

 

Weather forecasts through Monday see mostly high temperatures for the Midwest, said Drew Lerner of Worldwide Weather Inc. The Western corn belt is expected to see temperatures in the mid 90s to lower 100s, he said.

 

"Extremes up to 105 will be pretty common," he added.

 

In the eastern corn belt, weekend highs will average near the lower to mid 90s, and Illinois may see some highs in the upper 90s, Lerner said.

 

There may be few light scattered showers focused in the Ohio Valley, Wisconsin and Minnesota Saturday, he noted.

 

A rain event is forecast to roll through the Midwest beginning Tuesday in the western corn belt, with 85% coverage through Thursday, Lerner said. Precipitation is expected at 3/10 inch -8/10 inch and locally heavier to 1 1/2 inches, he added.

 

The rain forecast for the eastern Midwest begins Wednesday and extends through Friday with 100% coverage, Lerner said, with the same amount of precipitation as the west. During this time, temperatures are expected to cool down to the mid-80s to lower 90s, he added.

 

Another market factor was fund buying of back-month options rather than futures, a floor source noted.

 

Fund selling was estimated at 3,000 contracts.

 

Buyers Thursday included JP Morgan, which bought 500 September, Tenco bought 500 December and UBS bought 200 March.

 

Sellers Thursday included Goldberg-Hehmeyer, which sold 2,000 December, JP Morgan sold 700 December, Tenco sold 500 December, Fimat sold 500 December Calyon sold 300 December, and Rosenberg sold 300 September.

 

Oat futures settled higher lower as funds sold in light trade, a floor trader said. He noted traders began to roll out of the September contract.

 

September oats declined 2 1/4 cents to US$1.95 1/2 per bushel and the December contract lost 1 1/2 cents to US$2.00.

 

Ethanol futures settled steady-higher Friday. The August contract gained 2 cents to US$2.53 per gallon and the September closed unchanged at US$2.54.