August 2, 2006

 

CBOT Corn Review on Tuesday: Higher as traders add premium to market

 

 

Corn futures at the Chicago Board of Trade settled higher Tuesday recovering from modest losses set earlier in the session as market participants added some premium back into the market, sources said.

 

Tuesday was the first day of side-by-side trading with floor sources noting good volume traded on the screen. Overall grain volume was 43,911 contracts on e-CBOT according to the exchange. The benchmark December corn contract traded over 15,000 contracts.

 

The market put back in a little weather premium, a floor broker said. There is enough uncertainty about recent conditions in the western corn belt to support prices, he added.

 

Computer models suggest that the current weather system will fire up rains Tuesday night in southern Minnesota, northern Iowa and on into parts of eastern Nebraska and western Iowa, said Mike Palmerino, meteorologist with DTN Meteorologix Weather. It looks fairly likely that there will be a moderate to heavy rain event overnight in those drier areas of the western corn belt, especially looking north and west of Des Moines, he said. After the front passes to the east, temperatures will be at or a little bit below normal in the middle 80s. But as the rainfall diminishes, temperatures will begin to warm up again with highs of 85-90 degrees Fahrenheit on Thursday and highs in the upper 80s F to low 90s F on Friday with dry conditions expected on the weekend, Palmerino said.

 

Light corn-wheat and corn-soybean spreading also provided support, a commission house analyst said. Some people were buying corn and selling the other markets ahead of next week's crop production report he added.

 

Early fund selling pressed the market as well, but as the market rebounded, funds stepped in and covered those sales, a floor trader said.

 

Monday afternoon's crop progress report had little market impact with conditions declining three percentage points from last week.

 

The U.S. Department of Agriculture reported 56% of the U.S. corn crop was in good-to-excellent condition, down from 59% the previous week.

 

Conditions in Illinois remained unchanged at 69% good-to-excellent, while Iowa's good-to-excellent rating fell by five percentage points to 57%.

 

On day-only technical charts, December open outcry settled above its 10-day and 200-day moving averages.

 

Buyers Tuesday included Man Financial, which bought 2,300 December, Citigroup bought 500 December, Shatkin bought 50 December and Tenco bought 200 December.

 

Sellers Tuesday included Man Financial, which sold 2,300 December, Fimat sold 1,000 December, JP Morgan sold 500 December, and 300 March and DT Trading sold 300 December.

 

Overall commodity fund activity was even on the session.

 

Oat futures settled lower as light selling, thought to be fund related, pressed prices early in the session with the market unable to generate much upside traction, sources said.

 

September oats fell 1 cent to US$1.88 1/2 per bushel while December contract declined 2 3/4 cents to US$1.95 3/4.

 

Ethanol futures finished lower in thin trading. The August contract fell 10 9/10 cents to US$2.45 cents per gallon and September lost 6 9/10 cents to US$2.49.