August 25, 2006

 

CBOT Corn Review on Thursday: Firmer on wheat strength, short covering

 

 

Corn futures at the Chicago Board of Trade rose on Thursday, supported by strength in wheat and speculative short covering for a second day in a row.

 

Most-active December corn gained 4 1/4 cents to US$2.44 1/4 a bushel.

 

The market traded firmer after a positive opening on supportive weekly export sales data. The U.S. Department of Agriculture said weekly corn export sales were 181,100 metric tonnes for old-crop corn and new-crop corn sales were 1.554 million tonnes.

 

Funds bought about 5,700 contracts of corn, helping to spur the rally, analysts said.

 

"I think we had a little short-covering going on. The people who pressed it down to contract lows and since the (USDA August crop production) report are now getting out. But I don't think we've seen a lot of longs getting in," said one long-time broker. "Usually at this time of the year we catch a bid anyway."

 

Support also comes from reports of lower-than-expected corn yields from the eastern leg of the current industry crop tour.

 

Crop scouts on the John Deere/Pro Farmer Midwest crop tour surveyed a half-dozen fields across central sections of Iowa estimated average corn yields of 148.74 bushels per acre, up 1.3% from tour findings generated from the same area in 2005. The U.S. Department of Agriculture on Aug. 11 predicted statewide Iowa corn yields of 173 bushels/acre, unchanged from 2005.

 

Another group of crop scouts said virtually no disease pressure was seen in Minnesota corn fields, calling the fields "healthy," which was a stark contrast, scouts on this route said, from the disease problems seen the previous day in western Iowa.

 

Scouts said that although the 2006 corn crop will be "good," it won't be as good as last year. It looks like the state's crop will "easily" reach the USDA's 160-bushel figure, scouts along one tour route said. Scouts will continue surveying fields throughout the day and will meet up with other tour participants in Owatonnena, Minn., Thursday night to issue final estimates for Minnesota and Iowa.

 

The broker said starting next week private analytical firms and commercial firms will be conducting their own crop tours and that could add information to the market.

 

Buyers in corn include Calyon buying 200 December; Citigroup buying 500 December; Fimat buying 300 December and 1,000 December 2007 and; Iowa Grain buying 500 December; JP Morgan buying 200 September and 1,000 December; O'Connor buying 500 December; UBS buying 500 December. Sellers include ABN Amro selling 700 December; Tenco selling 500 December.

 

JP Morgan spread 1,000 September-December.