August 30, 2006

CBOT Corn Review on Tuesday: Falls as wheat weakens into close

After a quiet session, corn futures at the Chicago Board of Trade fell on Tuesday, following a late break in wheat.

Most-active December corn fell 2 1/4 cents to US$2.38 3/4 a bushel.

Corn futures were generally weaker due to little fresh buying interest and a dearth of news. Modest technical support and a lack of significant selling kept corn from breaking much. The market slipped to session lows when wheat turned softer.

"What was most disappointing was wheat," said one long-time floor broker. The factors that are supporting wheat - concerns about crop quality in European wheat, dryness in Argentine and Australian wheat - were present Tuesday, but wheat could hold. That helped to bring down corn.

"The problem is there wasn't much news flow," said another veteran grains broker. "We had a little movement to the upside, but we just didn't do much with it. I think what we saw were some hopeful day-trading longs get out after the market couldn't hold together."

Crop condition ratings from the U.S. Department of Agriculture late Monday dropped by one percentage point to 57% good to excellent, but analysts and traders said given the corn crop is heading to maturity, seeing a decline in ratings is to be expected. The crop is 12% mature.

In other news, the National Corn Growers Association, or NCGA, and 10 other grain groups are urging Commodity Futures Trading Commission, or CFTC, to continue to produce the weekly commitments of traders reports. The CFTC is reviewing the procedure. In a letter to the commission, the NCGA said the reports are important to agricultural producers and cited the need for more details within the reports. The CFTC is currently taking public comments on the matter.

Corn buyers include Term, Fimat and ABN Amro each buying 200 September; RJ O'Brien buying 300 September; and Iowa Grain buying 400 December. Sellers include FCStonnee buying 300 September; Man Financial selling 200 December and 400 September; Rand selling 200 December and 400 September; and UBS selling 1,000 December.