CBOT corn review: Limit down on higher acreage estimate
CHICAGO (Dow Jones)--Chicago Board of Trade corn futures settled limit down, 20 cents lower, Friday as a higher-than-anticipated U.S. planting intentions estimate from the U.S. Department of Agriculture prompted heavy selling, floor analysts said.
May corn fell 20 cents to $3.74 1/2 per bushel, July declined 20 cents to $3.85 1/2, and December settled 20 cents lower at $3.83 1/2.
"Almost nobody expected the corn acreage estimate to be this big and the market sold off as a result," a commission house analyst said.
The USDA estimated 2007 corn planted acreage at 90.454 million acres, well above the 88.061 million-acre average analyst estimate and sharply higher than the 78.327 million planted by U.S. farmers in 2006.
Market participants reacted to the higher number and wanted to liquidate their positions, a floor trader said.
The USDA estimated quarterly corn stocks as of March 1, 2007, at 6.070 billion bushels, above the average analyst estimate of 6.023 billion but well below the 6.987 billion on March 1, 2006.
The focus of the market was on the acreage report, the floor trader said.
The USDA estimated corn planted acreage would increase in several key Midwestern states with planted corn acreage in Illinois up an estimated 1.6 million acres to 12.9 million acres.
In Iowa, farmers are expected to seed 13.9 million acres to corn in 2007, up 1.3 million acres from 2006.
Producers in non-traditional "corn" states are also expected to increase production, taking advantage of the recent high prices. Corn acreage in Georgia is expected to increase 179% from last year with farmers in Mississippi expected to plant 950,000 acres in 2007, up 279% from 2006.
Corn options values indicate a sharply lower opening Sunday night, options traders said. Using options to create a "synthetic" futures position indicates prices could open 17 cents lower in Sunday night's electronic trading session, they said.
On daily technical charts, May futures gapped open lower and remained below their 100-day moving average with the 9-day Relative Strength Index at 25.67.
Commodity fund selling was estimated at 10,000 contracts.
Options trading was extremely active with traders turning to corn options as the futures were locked limit down, an options trader said. Estimated volume in corn options was pegged at 100,000 contracts by an options broker.
Oat futures settled sharply lower as spillover weakness from corn and wheat dragged values lower, a floor trader said. The spillover effect infected everything on the floor, the trader added.
May oats fell 15 1/2 cents to $2.76 1/2 per bushel and July declined 13 cents to $2.81 3/4.
Ethanol futures ended lower in light trade. The April contract settled 7.5 cents lower at $2.195 per gallon. The May contract dropped 3 cents to $2.15.
On Friday afternoon, the Commodity Futures Trading Commission was scheduled to release the commitment of traders report for the period ended March 27.