July 2, 2008


CBOT Corn Review on Tuesday: Lower on 'hangover' from Monday's report


Chicago Board of Trade corn futures continued to feel pressure Tuesday from Monday government reports, as prices dropped for the second straight day on the prospect of better-than-anticipated production and supply.


July corn was down 5 1/4 cents to US$7.19 1/2, September corn was down 5 1/2 cents to US$7.32 1/4 and December corn was down 5 cents to US$7.52.


The market experienced a "hangover" after Monday's losses, a trader said. The slump was precipitated by Monday's U.S. Department of Agriculture report on planted acreage and grain stocks, which were both greater than expected.


"We're still trading the report, and I certainly think that's why corn went in the opposite direction of beans today," said Bill Nelson, a grain analyst with Wachovia Securities.


Prices dropped more than 20 cents lower during midday trading, but bounced back and trimmed much of corn's losses late in the day. The strength in soybeans was seen by traders as supportive to corn.


"I think beans bounced late and dragged corn with it," a trader said.


With the highly anticipated planted acreage and grain stocks reports now released, the market will now begin to look at yield potential as the next driver of the market, traders said. There was little fresh fundamental news on Tuesday, they said.


"I think it's going to be a defensive market until we get our next weather story," a trader said.


Weather is currently seen as bearish. Forecasts call from mostly dry weather this week, and scattered showers and thunderstorms should be helpful for many areas, traders and analysts said.


Analysts said prices could vary greatly depending on this summer's weather. Despite the USDA report showing better-than-expected production and grain stocks, growers are "by no means" out of the woods yet, an analyst said.


July continues to trade without daily trading limits because it is in delivery. For other contracts, the daily limit will return to 30 cents Wednesday after being expanded to 45 cents Tuesday.


The USDA's crop progress report, which put the crop rated good or excellent at 61%, up from 59%, was seen as slightly bearish, although some analysts noted progress was still well behind average.


CBOT oats ended lower. July oats closed down 6 cents to US$4.38 per bushel, September oats closed down 6 cents to US$4.50 and December oats closed down 5 1/2 cents to US$4.67.


Ethanol futures were mixed. July ethanol ended down US$0.027 to US$2.82 per gallon and December ethanol closed up US$0.008 to US$2.845.


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