June 7, 2007

 

CBOT Corn Review on Wednesday: Finishes weaker on speculative selling

 

 

Chicago Board of Trade corn futures settled lower Wednesday, pressured by lower wheat and soybean values as corn continued in its recent role as a follower of the other grains, an analyst said.

 

July corn fell 5 1/2 cents to US$3.74 3/4 per bushel, September declined 4 1/4 cents to US$3.81 1/2, and December slipped 1 1/4 cents to US$3.81 1/4.

 

The speculative crowd wasn't interested in buying corn, the analyst said.

 

Bear spreading kept the nearby months under pressure as participants exited their July positions, a floor trader said. Technically the market is under a "dark cloud," said the trader. In addition, it was a commodity wide sell-off on Wednesday, the trader said, referring to the weaker grains and precious metals prices.

 

Midday weather forecasts continue to predict a high pressure ridge will development in the U.S. Midwest in medium-term weather outlooks but differed on the intensity and longevity of the system, a commission house analyst said.

 

An attempt to rally in early afternoon trade failed, "as rallies Wednesday were meant to be sold," said Joe Bedore, a floor manager with FC Stone.

 

Trading direction Thursday will depend on the overnight trade and the weather, and there could be some evening up of positions ahead of Monday's supply and demand report, the commission house analyst said.

 

An average of 18 analysts surveyed expect 2006-07 corn ending stocks at 947 million bushels, 10 million bushels above the U.S. Department of Agriculture's 937 million bushel estimate in May. The average ending stocks estimate for the 2007-08 crop year was 997 million bushels, 50 million bushels above the 947 million estimated in May.

 

On daily technical charts, July settled below its 50-day moving average and right at its 40-day moving average.

 

Commodity fund selling was estimated at 5,500 contracts.

 

In open auction trades, JP Morgan sold 1,500 December and Fimat sold 500 December.

 

In options trading, Rosenthal bought 3,000 September US$5.00 calls and Fimat sold 1,000 July US$4.20 calls.

 

Oat futures finished lower in light two-sided commission house trade, an oat trader said. Spillover weakness from corn and wheat kept the market on the defensive, the trader added.

 

July oats fell 2 1/4 cents to US$2.90 1/2 per bushel and December declined 3 3/4 cents to US$2.79 3/4.

 

Ethanol futures settled weaker in modest activity. July ethanol settled 2 cents lower to US$1.991 per gallon and August fell 1.5 cents to US$1.971. Thursday, the USDA is scheduled to release the weekly export sales report for the week ended May 31. Analysts expect sales to range from 600,000 to 1.0 million metric tonnes.