August 25, 2007

 

CBOT Corn Review on Friday: Ends lower; consolidates recent gains

 

 

Chicago Board of Trade corn futures ended lower Friday, consolidating recent gains amid the absence of fresh supportive news to bolster bullish enthusiasm.

 

September corn ended 3 3/4 cents lower at US$3.41 1/2, and December finished 3 1/4 cents lower at US$3.58 3/4.

 

The market had made a good recovery from recent lows, and was overdue to consolidate, with the exhaustion of buying at Thursday's highs encouraging some profit taking pressure, analysts said.

 

Overbought conditions was the key driver of the lower tonnee, with the absence of spillover support from wheat leaving futures without a bullish spark to attract buyers, analysts added.

 

Otherwise, light harvest pressure from early cutting in the southern corn belt added weakness to keep the most active December future pinned in between its 50-day and 100-day moving averages on technical charts, traders said.

 

Meanwhile, lingering concerns over the potential for crop damage as a result of upper Midwest floods provided light support to limit declines, traders added.

 

The DTN Meteorlogix weather forecast calls for additional heavy storms during the weekend with some flooding in the northern half of the Midwest - mostly in northern Missouri, southern and eastern Iowa and northern through central Illinois. The impact of this moisture will be variable. Some areas will benefit - notably southeastern Iowa, northeast Missouri and central Illinois.

 

However, rains in northern Illinois offer the potential for flooding to develop, which could damage late-season corn. Flooding and wind damage have already occurred during this week in parts of the upper Midwest - notably northern Iowa, southern Minnesota and southwestern Wisconsin, Meteorlogix reported.

 

Professional Farmers of America on Friday estimated the 2007-08 U.S. corn crop at 13.109 billion bushels. The organization, known as Pro Farmer, sees the U.S. corn yield at 153.47 bushels per acre. This compares to the U.S. Department of Agriculture's projection of a 2007-08 corn crop of 13.054 billion bushels, based on an average yield of 152.8 bushels/acre, in its Aug. 10 report.

 

In pit trades, JP Morgan bought 400 December, and Penson GHCO bought 700 December. MF Global sold 1,000 December and Fimat sold 300 December. Speculative fund selling was estimated at 3,000 lots.

 

In options, Rand Financial sold 1,000 September US$3.35 calls, and ADM Investor Services bought 1,000 December US$3.50 puts.

 

CBOT oat futures closed weaker after following the neighboring corn market into negative territory, a veteran floor trader said. September oats ended 1 cent lower at US$2.47 per bushel, and December oats slipped 3/4 cent to US$2.57 1/2.

 

Ethanol futures finished lower. September ethanol fell .006 cent to US$1.721 per gallon, and October ethanol settled down .022 cent at US$1.639.