September 7, 2006

 

CBOT Corn Review on Wednesday: Slips on technicals, informa, wheat

 

 

Chicago Board of Trade corn futures finished lower Wednesday as improving crop conditions, a bearishly construed crop estimate from Informa, technical selling and spillover weakness from wheat pressured prices, sources said.

 

September corn declined 2 1/2 cents to US$2.26 1/4, with December ending 3 1/2 cents lower at US$2.40 3/4. E-CBOT day-session volume in December totaled 39,727 contracts.

 

"It was a one-two punch," said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

The weekly crop ratings improved and Informa had a bigger-than-expected crop-production estimate, he said. In addition, wheat futures were weaker and weighed on corn as it ran into technical resistance, he added.

 

Tuesday, the U.S. Department of Agriculture reported the 59% of the U.S. corn crop was in good-to-excellent condition, up two percentage points from last week and above the 51% reported a year ago. Ninety-seven percent of the crop was in the dough stage, compared to the five-year average of 92%, with 81% of the crop reported in the dough stage. Twenty percent of the crop was reported mature.

 

The increase in ratings was amazing, as this is the time of the year when conditions usually decline, a floor source said.

 

Before the day session opened for trading, Informa Economics estimated the U.S. corn crop at 11.068 billion bushels with a yield of 153.5 bushels per acre.

 

In August, the USDA estimated the crop at 10.976 billion bushels with a yield of 152.2.

 

Informa's estimate wasn't positive and reinforced the USDA's numbers, a source added.

 

In August, the USDA estiamted the crop at 10.976 billion bushels with a yield of 152.2 bushels per acre.

 

Spillover selling from wheat also undermined corn prices, sources said.

 

Wheat ran into a lot of technical resistance and looks like it has hit a near-term top, Roose said. Recently, as wheat goes, so goes corn, Roose noted.

 

On technical charts, December corn settled beneath its 10-day and 20-day moving averages.

 

Buyers Wednesday included UBS, which bought 1,200 December; Citigroup, which bought 500 December; and Tenco, which bought 500 December.

 

Citigroup sold 600 December and 600 December 2007, Man Financial sold 1,300 December, Fortis sold 600 December and Goldenberg-Hehmeyer sold 600 December.

 

Commodity fund selling was estimated at 3,000 contracts.

 

Oat futures settled unchanged to lower Wednesday as early gains were reversed by light commission house selling and spillover weakness from corn and wheat, floor sources said.

 

September oats settled unchanged at US$1.88 per bushel and December fell 2 1/4 cents to US$1.93 1/2.

 

Ethanol futures settled lower in thin activity. September ethanol fell 4 cents to 2.11 per gallon and October slipped 3 cents to US$2.08.