August 18, 2006

 

CBOT Corn Review on Thursday: Spillover weakness weighs, new lows set

 

 

Chicago Board of Trade corn futures settled lower Thursday amid a general selloff in commodities and favorable weather conditions for the crop, sources said.

 

September fell 2 1/2 cents to US$2.19 cents per bushel and December declined 2 1/2 cents to US$2.35 1/2. Both September and December set new life-of-contract lows. Day session volume for e-CBOT December contracts was 26,000.

 

Corn wasn't immune to the general weakness in commodities, a commission house broker said.

 

"It was a pretty tough day in commodities," agreed Bill Nelson, assistant vice president at AG Edwards & Sons in St. Louis.

 

The weather outlook remains benign for the crop across much of the U.S. Midwest, with no extreme heat and more rain, which can help the crop fill out, he added.

 

In addition, there was a very sharp setback in energy and metals, which spilled over into the agricultural markets, Nelson added.

 

Export sales for both the old crop and new crop years were above analyst expectations, but the market was unable to generate much enthusiasm, sources said.

 

"When you combine old crop and new crop, sales are over 60 million bushels for the week, which is a very fine week," Nelson said.

 

USDA reported weekly corn exports were a combined 1,605.1 million metric tonnes for both the 2005-06 and 2006-07 crop years in the week ended Aug. 10.

 

Longer term, the exports are a positive indicator for corn demand, but shorter term the market is focused on the weather and declines in commodities in general, Nelson added.

 

December corn's 14-day relative strength index is 29.94, with a reading below 30 indicating oversold conditions.

 

Buyers Thursday included JP Morgan, which bought 300 December.

 

Tenco sold 800 December, JP Morgan sold 500 December and 300 September, and Man Financial sold 300 December.

 

Overall commodity fund selling was estimated at 2,600 contracts.

 

Oat futures settled unchanged to lower as aggressive commercial-related buying was offset by spillover selling from lower corn and wheat values, a floor trader said.

 

September oats slipped 3/4 cent to US$1.76 3/4 per bushel and December ended unchanged at US$1.85.

 

Ethanol futures ended moderately lower in modest market activity. September ethanol fell 11.2 cents to US$2.408 cents a gallon and October fell 6.7 cents to US$2.408.