August 3, 2007

 

CBOT Corn Review on Thursday: Ends higher on crop production estimates

 

 

Chicago Board of Trade corn futures settled higher Thursday but were unable to rally because the trade is waiting for further verification of new-crop production estimates, analysts said.

 

September corn ended 5 cents higher at US$3.24 per bushel, December rose 5 1/4 cents to US$3.41 1/4, and March closed up 5 cents at US$3.56 1/4.

 

Futures prices met a ceiling after initial gains made on FC Stonnee's friendly yield and production estimates and strong U.S. weekly export sales Thursday, analysts said.

 

FC Stonnee estimated 148 bushels per acre yield and production of 12.644 billion bushels Wednesday afternoon. In July's supply and demand report, the U.S. Department of Agriculture estimated 150.3 bushels per acre yield and production of 12.84 billion bushels.

 

However, prices were reluctant to rally because the market wants to verify FC Stonnee's estimates before pushing prices, analysts said. "The trade looks at it and says, 'More estimates are to follow, so we're not going to stake a huge reliability on that,'" said Don Roose, president of U.S. Commodities. Private analytical firm Informa Economics is expected to release its crop production estimates Friday morning.

 

Stronger than anticipated weekly export sales released Thursday morning also boosted prices, analysts said.

 

U.S. weekly corn export sales totaled 1.776 million metric tonnes for the week ended July 26, the USDA reported Thursday, well above the 700,000 to 1.15 million tonnes expected by analysts. Included in the total were sales of 970,200 tonnes for delivery in the 2007-08 marketing year.

 

Weather forecasts helped to cap the price gains as midday weather forecasts called for significant rains in the northern corn belt this weekend and into next week, a trader said.

 

"All we did was drive up into (technical) resistance areas," Roose said. "I think the market is very concerned with the length by the hedge funds in the market...realizing they do have the ability to liquidate at any time."

 

On daily technical charts, electronically traded December corn finished below most of its major moving averages.

 

In open auction trading, ADM bought 1,000 September and 400 December. Tenco bought 500 September and Man Financial bought 400 December.

 

In options trading, Man Financial bought 4,000 September US$3 puts and 1,000 December US$2.80 puts. JP Morgan bought 2,000 December US$3.10 puts and sold 2,000 March US$3.30 puts.

 

Commodity fund buying was estimated at 8,000 contracts.

 

CBOT oat futures settled higher after a day of extremely light trade with no price direction, traders said. Prices are expected to remain at current levels until harvesting news enters the market, a trader said.

 

September ended 3 cents higher at US$2.60 per bushel, and December settled up 1 cent at US$2.70.

 

Ethanol futures finished mixed in light trade. August ethanol settled 2.5 cents lower at US$1.915 per gallon, and September ended 4.5 cents higher at US$1.832.

 

On Friday, the Commodity Futures Trading Commission is scheduled to release the weekly commitments of traders report for the period ended July 31.