July 4, 2008

 

CBOT Corn Review on Thursday: Profit-taking, weather push lower

 

 

Pre-weekend profit taking and a lack of bullish weather news pushed CBOT corn futures lower Thursday, traders said.

 

July corn was down 2 3/4 cents to US$7.46 per bushel, September was down 3 1/4 cents to US$7.57 3/4, and December was down 3 1/2 cents to US$7.77.

 

After rallying Wednesday on concerns about a crop-damaging heat wave next week, an absence of bullish weather news contributed to Thursday's losses, traders said. But they added that concerns about the crop will continue to be supportive throughout the summer, and limited losses Thursday. The market is likely to remain very sensitive to potentially harmful weather patterns, as it was Wednesday, a trader said.

 

"This is going to be touch-and-go for a long time," a trader said.

 

DTN Meteorlogix says heavy rains in parts of the U.S. corn belt Thursday have renewed flooding fears, but heat is not an issue for corn heading into the middle of July.

 

"The highest outlook for midsummer weather trends continues to be on the side of wet weather rather than a hot and dry scenario," the forecast states.

 

Although heavy rains are seen as harmful to some areas, analysts say more of the crop needs the rain for growth.

 

Traders, cautious ahead of the long Fourth of July weekend, booked profits Thursday, analysts said. The CBOT will be closed Friday.

 

Analysts had mixed views of net export sales, which were reported at 628,400 metric tonnes for the week ended June 26. That was at the high end of estimates, which were between 300,000 and 700,000 metric tonnes. But some analysts said the old crop export sales, which totaled 325,900, were disappointing, and another sign of declining demand.

 

Higher prices are causing "radically slowing demand," Wachovia Securities grains analyst Bill Nelson said in a market comment.

 

Although prices closed down several cents for the week, a trader said the market ultimately showed strength in light of Monday's bearish U.S. Department of Agriculture report on planted acreage and quarterly stocks.

 

"It's still a good performance, given what happened in the beginning of the week," he said.

 

CBOT oats ended higher, as September and December both set new contract highs. July oats closed up 1 cent at US$4.55 per bushel, one cent below the all-time record of US$4.56, set March 3. September closed up 5 3/4 cents to US$4.67 3/4, after setting a new contract high at US$4.68. December closed up 6 cents to US$4.86, its new contract high.

 

Traders said there was commercial buying of December, but added there were no clear reasons for the new highs. "I can't explain it," one trader said. "There's no reason for it to be this high."

 

Ethanol futures were slightly higher. July ethanol was up US$0.002 to US$2.863 per gallon, and December ethanol was up US$0.021 to US$2.880.