July 1, 2008

 

CBOT Corn Review on Monday: Falls on report, weather, profit-taking

 

 

Bearish government estimates on planted acreage and end-of-quarter profit-taking pushed Chicago Board of Trade corn futures sharply lower Monday.

 

September corn was down 30 cents, the exchange-imposed daily limit, to US$7.37 3/4 per bushel, and December corn was down 30 cents to US$7.57. July, which traded without limits because it is in delivery, ended down 30 cents to US$7.24 3/4.

 

The losses followed the U.S. Department of Agriculture's planted acreage and quarterly grain stocks report, released Monday morning. The USDA increased its planted acreage estimate by 1.3 million acres to 87.327 million, well above analysts' expectations, and pegged corn stocks at 4.028 billion bushels, compared to analysts' estimates of 3.925 billion.

 

The grain stocks report will mean a higher carryout in the government's July supply and demand report, and traders are saying "maybe there's more corn out there than we think," a trader said.

 

In addition to the report, Monday's losses were driven by the fact that it was the end of the month and quarter, analysts said.

 

"You wonder if there isn't some long profit-taking that has factored into the mix," said Dale Durchholz, an analyst with AgriVisor. "I don't know if there's any new selling in this."

 

Traders and analysts have questioned the accuracy and relevancy of the report, given that the USDA has already said it will conduct more surveying in July ahead of another report in August. But despite those uncertainties, the market took the report at face value, traders said.

 

"It's the government. You've got to trade it," a trader said.

 

The USDA said its Aug. 12 Crop Production report will contain the first 2008 estimates of corn and soybean yield and production. For that report, the government will survey about 9,000 farmers in Mid-July to more fully assess the impact of June flooding. The USDA surveyed 1,150 farmers prior to Monday's report.

 

Forecasts calling for drier weather added more pressure to Monday's prices, analysts said. Prices had rallied for much of last week on heavy rains and flooding.

 

"You can't have extraordinary prices without extraordinary weather," said Vic Lespinasse, an analyst with Grainanalyst.com. "And we don't have that right now."

 

July had traded more than 30 cents lower for much of the day, and a floor analyst said other contracts were trading synthetically about 10 cents lower than the daily limit late in the day.

 

CBOT oats ended higher. July oats closed up 12 cents to US$4.44 per bushel, September oats closed up 10 1/4 cents to US$4.56 and December closed up 8 3/4 cents to US$4.73. A trader said a single buy late in the day accounted for much of the gains.

 

Ethanol futures were lower. July ethanol was down US$0.077 to US$2.840 per gallon and September ethanol was down US$0.086 to US$2.849 per gallon.