July 1, 2006

 

CBOT Corn Review on Friday: Rallies on speculators buying after USDA reports

 

 

Corn futures settled higher Friday, benefiting from a planted acreage estimate that was slightly below the average analyst estimate, triggering speculative buying with mixed weather forecasts for early July adding to the buying interest as the U.S. corn crop will soon enter its key pollination period, sources said.

 

July corn gained 7 cents to US$2.35 1/2 per bushel and December settled 5 3/4 cents higher to US$2.60 1/4.

 

The U.S. Department of Agriculture estimated 2006 corn planted acreage at 79.366 million acres, below the average analyst estimate of 79.797 million but above the March estimate of 78.019 million.

 

Quarterly corn stocks were pegged at 4.363 billion bushels, in line with analyst estimates of 4.362 billion and nearly unchanged compared to the 4.321 billion in June 2005.

 

The acreage numbers weren't bearish and December gapped higher on the opening on technical charts, a commission house analyst said. The path of least resistance was up and that's where the market headed, he added.

 

There weren't a lot of sellers in the market, a floor source noted. The funds bought it and there was position evening ahead of the weekend and end of the month and quarter, he added.

 

In addition, the weather is the key for corn in July and the weather outlook is mixed, the analyst noted.

 

Midday weather forecasts were slightly negative compared to an earlier outlook with the midday forecast predicting more rain over the weekend and additional rain forecast for early next week, a floor source said. However, the forecast didn't have much of an impact as people wanted to own it ahead of the weekend, he added.

 

On technical charts, December gapped open higher and settled at its highest levels since mid-June, finishing above its 10-day and 200-day moving averages.

 

Buyers Friday included ABN Amro, which bought 1,500 December, Fimat bought 2,000 December and 1,000 September, Merrill Lynch bought 1,000 September, JP Morgan bought 1,000 September and 500 2007 December, the Refco division of Man Financial bought 2,000 September and 1,000 December and UBS bought 1,000 December.

 

Sellers Friday included Calyon Financial, which sold 2,000 December, ABN Amro sold 1,000 December, the Refco division of Man Financial sold 800 December and 300 July, FC Stonnee sold 500 December and JP Morgan sold 3,000 December.

 

Overall commodity fund buying was estimated at 10,000 contracts.

 

Oat futures settled higher as light fund buying in the December future and the lack of selling interest in September helped underpin futures, a floor trader said. Spillover support from firm corn values also provided support, he added.

 

July oats rose 1 3/4 cents to US$2.12 3/4 per bushel, after setting another new life of contract high at US$2.13, while the December contract gained 6 3/4 cents to US$1.93 1/2

 

Ethanol futures ended modestly lower in light trading. The August contract fell 1 cent to US$2.89 per gallon with the September contract down 8 cents to US$2.66

 

Friday afternoon the Commodity Futures Trading Commission is scheduled to release the latest commitment of traders report and on Monday, the USDA is scheduled to release the weekly export inspections report at 10:00 a.m. CDT and the weekly crop progress report at 3:00 p.m. CDT (2000 GMT).