July 31, 2007

 

CBOT Corn Review on Monday: Closes higher on late position squaring

 

 

Chicago Board of Trade corn futures settled higher Monday, recovering from losses set earlier on position squaring ahead of Monday's crop condition report and participants unwinding wheat-corn spreads, analysts said.

 

September corn settled up 2 1/2 cents at US$3.23 1/2 per bushel, December rose 3 1/2 cents to US$3.40, and March ended up 3 1/2 cents at US$3.55 1/4.

 

"I think a lot of Monday's trade was flat out position squaring ahead of the crop conditions," said Mike Zuzolo, analyst with Risk Management Commodities.

 

Zuzolo predicts crop ratings will decrease 3-4 percentage points from last week's rating of 62% of the crop in good-to-excellent condition because of low rainfall totals in the western Midwest last week. "It wasn't nearly as heavy as people thought," Zuzolo said.

 

Reversing wheat-corn spreads by buying corn and selling wheat also added support, Zuzolo said. September wheat fell 15 3/4 cents to US$6.37 1/2.

 

Midday weather forecasts calling for warmer, drier weather in the near-term in the U.S. Midwest added to later gains, a trader said. A midday weather forecast from T-storm Weather said drier weather is expected in the corn belt next week as thunderstorms move north of drier areas.

 

However, there is a chance for rainfall in Nebraska and parts of western Iowa this weekend, T-storm said, however, the dry areas of Minnesota and South Dakota are expected to miss out on the needed rainfall.

 

Earlier in Monday's session, prices came under pressure from spillover selling of sharply lower wheat prices and technical selling. Technically, the corn close was very impressive as December held US$3.29 and finished at US$3.40, a trader said.

 

In open auction activity, JP Morgan bought 500 March and 400 December. Rand Financial bought 400 December. RJ O'Brien sold 300 December.

 

In options trading, Rand Financial bought 600 September US$3.30 calls and FC Stonnee bought 500 December US$3.40 calls. Citigroup sold 500 March US$3.90 puts and JP Morgan sold 500 December US$3.60 calls.

 

Oat futures settled higher in spread dominated activity, a trader said. Funds sold Sep and bought Dec while commercials bought Sep and sold Dec. Prices also found support from late spillover buying from corn and soybeans, a trader said.

 

Sep ended 1 1/2 cents higher at US$2.57 1/4 per bushel, Dec settled up 3 3/4 cents at US$2.66 1/2.

 

Ethanol futures finished lower in light trade. August ethanol settled 3.9 cents lower at US$1.925 per gallon and September ended 1.8 cents lower at US$1.852.

 

On Monday, the U.S. Department of Agriculture is scheduled to release the weekly crop progress report at 4 p.m. EDT.