January 10, 2006

 

CBOT Corn Review on Monday: Down on rain forecasts, weak soy complex

 

 

Corn futures traded at the Chicago Board of Trade finished lower Monday, dragged down by sharply lower soybeans and rain overnight in Argentina and forecasts for additional rain after midweek in that country, floor traders said.

 

Argentina is a major competitor to the U.S. in corn export markets.

 

March corn fell 3 1/4 cents to US$2.11 per bushel, May corn lost 3 cents to US$2.20 1/2, and July corn declined 2 3/4 cents to US$2.29 per bushel.

 

The rain in Argentina caught the market by surprise, said a floor trader. The forecast for additional rain later in the week added pressure, he said.

 

DTN Meteorlogix weather forecast that a high pressure ridge currently bringing hot and dry weather to Argentina's corn producing regions will move off to the east during the latter half of the week with a significant rainfall expected.

 

Sharply lower soy complex futures also added to the negative tonnee. January soybeans fell 17 cents to US$5.94 per bushel, with March soybean meal declining US$4.10 to 184.60 per short tonne.

 

The cash pipeline is full right now, there's a big report due out on Thursday and the funds are long with the technical picture breaking down," said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

The U.S. Department of Agriculture is scheduled to release crop production, grain stocks, supply/demand and winter wheat seedings on Thursday.

 

March corn gapped open lower on day only charts and fell beneath US$2.12, a key level of support, a market analyst said.

 

On technical charts, March corn finished below its 20-day moving average, but remained above its 50-day moving average.

 

"It's all about the money flow and today the flow is negative," a commission house broker said. Long positions put on early last week continue to be liquidated, he added.

 

Weekly export inspections were 29.086, near the high end of the range of analyst's estimates of 24-30 million but had no impact, traders said.

 

Buyers on Monday included Cargill, which bought 1,000 March, Fimat bought 1,000 March, Goldenberg-Hehmeyer bought 3,000 March, Iowa Grain bought 1,500 March, the Refco division of Man Financial bought 3,000 March and O'Connor bought 600 July.

 

Sellers Monday included Calyon Financial, which sold 1,500 March, JP Morgan sold 1,000 March and 300 December, Fimat sold 1,000 March, Tenco sold 1,000 March, UBS sold 600 March, Rand sold 500 March and the Refco division of Man Financial sold 400 March and 200 July.

 

Commodity fund buying was estimated at 2,400 contracts.

 

Oat futures finished sharply lower with the March contract down 6 cents at US$1.85 1/4 per bushel. March oats have fallen almost 17 cents from the high reached last week.

 

Ethanol futures settled higher. The most-active April contract ended up 1 1/2 cents at US$2.16 per gallon.