August 3, 2006

 

CBOT Corn Review on Wednesday: Higher on technicals, weather, yields

 

 

Corn futures finished moderately higher Wednesday as a combination of factors provided a solid underpinning for higher prices.

 

September ended up 6 3/4 cents at US$2.47 1/2 per bushel, and December gained 6 1/2 cents to US$2.64 1/4. Volume in e-CBOT day-only September corn was 11,828 contracts and December volume was 34,452 contracts

 

The market began higher on spillover from overnight gains and ideas that overnight rain in the western U.S. corn belt missed some of the dry areas, sources said.

 

Last week, this rain event was expected to be the best rain of the season and it appears to have fallen short, a floor analyst said.

 

Technical buying and concerns about the possibility of lower corn yields due to the extreme heat and dryness in parts of the U.S. Midwest also provided support.

 

Several private forecasters are scheduled to release their yield estimates over the next several days.

 

Midday weather updates pushed back rain expected early next week until midweek and that also provided support, the analyst added.

 

Next week looks dry until Tuesday-Wednesday, said Bill Nelson, a meteorologist and associate vice-president with AG Edwards & Sons in St. Louis. Between now and then the western corn belt looks to be mostly dry, he added.

 

Stronger outside markets also added support. "It's August and everybody remembers what happened to energy prices last August," Nelson said.

 

On open auction technical charts, December finished above its 20-day and 40-day moving averages, but below its 50-day moving average of US$2.65 3/4.

 

Buyers Wednesday included JP Morgan which bought 1,000 December, O'Connor bought 1,000 December, FC Stonnee bought 700 December, Rosenthal bought 600 September and ADM bought 200 December.

 

Sellers Wednesday included O'Connor, which sold 2,500 December, UBS sold 2,000 December, JP Morgan sold 500 December and Fimat sold 500 December and 200 September.

 

In spread trading, Merrill Lynch bought 3,000 September-December and Calyon bought 1,000 December-September.

 

Oat futures settled mostly higher in light trading with "the market sympathetic to higher prices across the rest of the floor," a floor trader said. "Oats are a follower, not a leader today," he added.

 

September oats gained 2 cents to US$1.90 1/2 per bushel while December contract settled 1/4 cent higher at US$1.96.

 

Ethanol futures settled higher in light activity. The August contract rose 3 cents to US$2.48 cents per gallon and September ended 4 cents higher at US$2.53.

 

Thursday morning, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended July 27. Analysts expect sales between 900,000-1.2 million metric tonnes.