January 5, 2007

 

CBOT Corn Review on Thursday: Settles near lows on technical weakness

 

 

Chicago Board of Trade corn futures ended lower Thursday and near session lows set late in the day as technical selling and long liquidation pressured prices after an earlier move to the upside failed to take root, sources said.

 

March corn fell 8 1/4 cents to US$3.62 1/4 per bushel and May corn also declined 8 1/4 cents, to 3.71 3/4. e-CBOT day session volume in March was 85,504 contracts.

 

Corn began the session at lower levels, gapping open to the downside on open auction technical charts, sources said. The market came under pressure on the opening but early selling was exhausted and the market firmed near midsession, said Shawn McCambridge of Prudential Financial.

 

However, once March couldn't remain above its 50-day moving average of US$3.68 1/2, technical selling helped push prices lower once more, a floor analyst said.

 

Near the close, futures dipped to their lows of the session on continued technical selling and long liquidation, a floor trader said.

 

The market is still trading strong demand but having it doesn't give the market much new direction to trade, McCambridge said.

 

It should be hard in the near term to trade below US$3.60-US$3.62 in March, as sellers become wary of putting on short positions on concerns of fresh fund buying interest at that level, he added. The mid-December low was US$3.62.

 

News before the opening that Mexico bought 410,000 metric tonnes of U.S. corn and Egypt bought 120,000 tonnes helped mitigate some expectations of a lower opening, floor sources said.

 

Commodity fund selling was estimated at 5,000 contracts, floor sources said.

 

On open auction technical charts, March corn opened below its 50-day moving average and settled below it for the first time since Sept. 20. March settled at its lowest level since Nov. 13. The 14-day Relative Strength Index in March stands at 40.66.

 

Buyers Thursday included Man Financial, which bought 1,000 December and 500 March; Fortis, which bought 1,000 July; and RJ O'Brien, which bought 500 March.

 

Iowa Grain sold 800 March, Fimat sold 500 March, and JP Morgan sold 400 December.

 

In options trading, Tenco bought 1,000 March US$3.80 calls and 1,000 February US$3.70 calls and sold 2,000 February US$3.90 calls.

 

Oat futures ended with modest declines as spillover from late weakness in corn and wheat overwhelmed light fund buying in May and commercial buying of the March, sources said.

 

March oats settled 3/4 cent lower at US$2.61 1/4 per bushel and May fell 1/2 cent to US$2.68 1/2.

 

Ethanol futures finished mixed in quiet trade. The January contract did not trade and fell 4.8 cents to US$2.442 per gallon. The February contract ended unchanged at US$2.36.

 

On Friday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the period ended Dec. 28. Analysts expect sales between 700 million-1.0 million metric tonnes