August 23, 2006

 

CBOT Corn Review on Tuesday: Down following wheat's losses

 

 

Corn futures at the Chicago Board of Trade ended weaker Tuesday, pressured by losses in wheat and a lack of bullish inputs to support the market.

 

Most-active December corn slipped 1 1/2 cents to US$2.36 a bushel.

 

Corn traded generally weaker as there was little friendly news to give bulls an incentive to bid up the market. In fact, December corn traded in a 1 1/2-cent range, underscoring the quietness of trade.

 

Jerry Gidel, analyst at NARMS Inc., said corn was following the wheat market, which was weaker because of rains in the panhandle of Oklahoma. CBOT September wheat fell 6 cents to US$3.59 3/4 a bushel and those losses were too much for the corn market to withstand. Not even a late-day pop in soybeans was enough to unshackle corn from wheat's weakness.

 

News came from day two of the 2006 John Deere/Pro Farmer Midwest crop tour. Along one route through Nebraska the corn crop saw numerous disease problems - primarily gray leaf spot and charcoal rot - in both dryland and irrigated corn.

 

Scouts along the route, which was part of the western leg of the annual crop tour, said corn yields will likely be reduced due to the disease problems. Variability was also a big factor in corn.

 

On the eastern leg of the tour, scouts found that bountiful spring rains plumped up harvest prospects for corn across northern Indiana early Tuesday.

 

On one route of the tour, scouts visited a dozen fields during a morning jaunt across northeastern and north-central Indiana estimating average corn yields of 140.6 bushels an acre in U.S. Department of Agriculture crop districts 2 and 3. That represents a yield increase of 6% over field checks conducted across the same tour route in 2005.

 

"It'll be interesting to see what they get from Nebraska. USDA has them similar to last year, but at the end of last year they had to knock 5-7 bushels from the yield because they had a dry tail-end. Maybe we'll see the same thing in Ohio," said Gidel, who added parts of northern Illinois are a little dry, but not nearly as dry as Ohio, which is now looking at 30 days without rain.

 

Gidel noted there is a lot of discussion of cutting corn for silage west of the Mississippi River, especially in areas where drought was a true problem.

 

"It'll be an interesting twist to see what USDA does with harvested acres because they didn't change that much in August. We could see higher yields, but yet it could get (slippage) on corn due to harvested acres," he said.

 

Buyers in corn included Bung buying 300 September; Man Financial buying 600 December; J.P. Morgan buying 500 December; Tenco buying 200 September; and USA Trading buying 300 September. Sellers included Calyon selling 200 December; FIMAT selling 300 December; and Fortis selling 200 December. In spreads, Tenco spread 2,000 September-December. In options, Rand bought 1,500 December US$2.50 calls.