November 10, 2006

 

CBOT Corn Review on Thursday: Ends Lower After USDA Report

 

 

Chicago Board of Trade corn futures settled lower Thursday and just off session lows, unable to gain any traction to the upside after the U.S. Department of Agriculture released the November crop production and supply-demand reports.

 

December corn fell 7 3/4 cents to US$3.50 cents per bushel and March settled down 7 1/2 cents to US$3.66. E-CBOT day session volume in December was 96,502 contracts.

 

The USDA estimated U.S. corn production at 10.745 billion bushels, below the average analyst estimate of 10.838 billion and October's 10.905 billion bushel estimate.

 

Although corn's crop production estimate was supportive, the market has had to take into consideration the substantial price rally since September, said Shawn McCambridge, senior grain analyst at Prudential Financial.

 

The crop's yield per acre was reduced to 151.2 bushels per acre, below the 153.5 forecast by the USDA last month and the average analyst estimate of 152.5.

 

The market is consolidating, evaluating whether demand has been affected by the recent price gains, he added.

 

2006-07 corn ending stocks were trimmed to 935 million bushels from 996 million in the October report, but above the average trade guess of 912 million bushels.

 

In the supply-demand balance sheet, the USDA trimmed feed usage by 50 million bushels and cut its estimate of corn exports by 50 million bushels.

 

The upside potential in corn remains but without the funds continuing to buy, the market will consolidate, McCambridge added.

 

The USDA increased China's 2006-07 corn production by 2 million metric tonnes to 143.0 million tonnes, but the USDA left China's corn export estimate unchanged at 4 million metric tonnes.

 

Weekly U.S. export sales were 1.929 million metric tonnes for the week ended Nov. 2, well above the 800,000-1.2 million metric tonnes expected by analysts and the highest in any week in over 10 years, according to sources.

 

Spillover losses from wheat and technically inspired selling pressured the market to lows of the session late, a floor source said.

 

On daily open-auction technical charts, December filled to the downside an upside price gap created during Wednesday's rally, but remained above its major moving averages.

 

Buyers on Thursday included Tenco, which bought 3,000 March; Goldenberg-Hehmeyer, which bought 1,200 July; and Citigroup, which bought 300 July and 200 September.

 

UBS sold 1,000 December 2007, JP Morgan sold 500 July and 1,500 December 2007, Goldenberg-Hehmeyer sold 1,000 December and ABN Amro sold 500 March.

 

Overall commodity fund selling was estimated at 1,000 contracts.

 

In options trading JP Morgan sold 2,000 December US$3.50 puts.

 

Oat futures settled moderately lower as commission house selling and spillover weakness from wheat and corn pressured oat futures, a floor source said.

 

December oats fell 4 1/4 cents to US$2.67 cents per bushel and March declined 4 1/2 cents to US$2.77 1/2.

 

Ethanol futures ended unchanged. The December contract did not trade and settled unchanged at US$2.12 cents per gallon. The January contract also did not trade and finished unchanged at US$2.07.