September 13, 2006

 

CBOT Corn Review on Tuesday: Down on larger USDA crop production

 

 

Chicago Board of Trade corn futures finished lower Tuesday as the U.S. Department of Agriculture's larger-than-expected 2006-07 corn production figure pressured prices, sources said.

 

September corn declined 5 1/4 cents to US$2.23 1/2 cents per bushel, and December fell 5 3/4 cents to US$2.37 3/4. E-CBOT day session volume in December was 49,834 contracts.

 

The USDA estimated the 2006-07 corn crop at 11.114 billion bushels in September, above the 10.976 billion estimated in August and the average analyst estimate of 10.996 billion.

 

The crop's yield was pegged at 154.7 bushels per acre compared to 152.2 in August.

 

2006-07 ending stocks were estimated at 1.220 billion bushels, slightly below the 1.232 estimated in August. 2005-06 ending stocks were estimated at 2.012 billion, 50 million bushels below the August forecast.

 

The production number didn't get smaller as some of the bulls thought it would, a floor analyst said. "Big crops tend to get bigger over time," he added.

 

"The government raised the production numbers and all the bears jumped on that," said Bob Anderson of Commodity Services in Des Moines, Iowa. The market sees the numbers as negative but in fact the USDA didn't carry the increases through to the carryover, he added. It's not nearly as bearish as most people think, but corn should test those lows around US$2.33-US$2.34, Anderson said.

 

Corn also came under pressure from options-related selling, a floor source said. Advantage Futures was noted selling 4,000 December US$2.40 calls and ABN Amro bought 4,500 December US$2.20 puts.

 

On technical charts, December settled below its 20-day moving average and traded beneath its recent low of US$2.38 1/4

 

Buyers Tuesday included Man Financial, which bought 1,000 December; ABN Amro, which bought 1,300 December as part of a corn-wheat spread; and Rand Financial, which bought 500 December.

 

JP Morgan sold 2,000 December and 1,000 March, and Fimat sold 1,000 December.

 

Commodity fund selling was estimated at 3,000 contracts.

 

In spread trading, Man Financial bought 5,000 March-December.

 

Oat futures ended mixed in light two-sided trading as Tuesday's USDA reports were unchanged from data released in August, limiting activity, sources said.

 

September oats rose 1 cent to US$1.89 per bushel and December settled unchanged at US$1.93 3/4.

 

Ethanol futures settled moderately lower in thin trade. October ethanol fell 14.5 cents to US$1.87 cents per gallon. November declined 14.2 cents to US$1.858.