August 22, 2006

 

CBOT Corn Review on Monday: Higher; bounce on oversold ideas

 

 

Corn futures at the Chicago Board of Trade ended firmer Monday, as traders bought modestly on ideas the market is oversold after recent losses.

 

Most active December corn rose 1 3/4 cents to US$2.37 1/2 a bushel. The market traded firmer for much of the session, supported by a small technical bounce after Friday's move to a new low. Floor traders said there was little fund selling that kept the market supported.

 

"In the short term we were definitely oversold. I can easily see this market bouncing back to US$2.40s, but that's nothing to write home about," said Jim Smitherman Harvest Trading Group, LLC, Austin, Texas.

 

After recent losses there are some hopes that the corn market might have generated some export business and that could have underpinned trade, analyst said.

 

In other news, the U.S. Department of Agriculture reported 46.514 million bushels of corn were inspected for export in the week ended Aug. 17. The export figure is down 1.7% from the previous week's 47.338 million bushels. Analysts surveyed by Dow Jones anticipated corn inspections in the range of 38 million to 47 million bushels.

 

The market is watching the news out of the 2006 John Deere/Pro Farmer Midwest crop tour. South Dakota corn has been "average" despite weather stress, according to one group of crop scouts on the western leg of the tour. Crop scouts covered an area from Sioux Falls, S.D., and will end up Grand Island, Neb., Monday. The scouts said early in the day, as they moved north, the corn was "pretty average," but the condition of the corn did worsen as they traveled west.

 

In the eastern half of the tour, corn crops were deemed "average" in western Ohio. The scouts will meet in Anderson, Ind., on Monday evening. As of midday, scouts on one route of the tour had evaluated 10 corn fields and found slightly better corn yield prospects in northern Ohio compared to fields seen on a similar tour route in 2005. The USDA presently projects a U.S. corn crop of 10.976 billion bushels, down 1.3% from 2005.

 

Weather has been generally benign, but Smitherman pointed that "weather really isn't a consideration anymore" and harvest is expected to pick up in the south in the next few weeks.

 

Given recent losses, Smitherman also said the market could be near its harvest lows, but without any bullish demand news, "it's hard to see (December) corn over US$2.50."

 

Corn buyers included Fimat buying 200 September and 800 December; O'Connor, RJ O'Brien, UBS and Rand each bought 100 September; and Tenco bought 200 December. Sellers included Calyon selling 1,200 December; Citigroup selling 300 December; and O'Connor selling 1,000 December.

 

Tenco spread 2,000 December-September.