January 10, 2008

 

CBOT Corn Review on Wednesday: Slightly lower on profit-taking

 

 

Chicago Board of Trade corn futures ended mildly lower Wednesday with trading modest compared to recent activity as profit-taking ahead of Friday's USDA crop production and stocks data weighed on the market.

 

March corn settled 1 1/2 cents lower at US$4.77 1/4 per bushel.

 

Corn came under mild pressure on position squaring by weak longs, a commission house analyst said. The market rallied to a fresh life-of-contract and 12-year highs in overnight trade and opened higher on spillover buying. However, corn was unable to attract additional buying interest, and some participants exited long positions, ahead of Friday's U.S. Department of Agriculture reports, the commission house analyst said.

 

The average production estimate for the 2007-08 U.S. corn crop was 13.109 billion bushels, according to a survey of 19 analysts by Dow Jones Newswires, 59 million bushels below the 13.168 billion estimated by the U.S. Department of Agriculture in November. The average yield estimate for the 2007-08 crop was 152.3 bushels per acre, according to 15 analysts surveyed, compared to the 153.0 bushels estimated in November.

 

The average 2007-08 corn ending stocks estimate is 1.698 billion bushels, according to a survey of 17 analysts, down from the 1.797 billion bushels estimated in December. The average quarterly corn stocks estimate as of Dec. 1 is 10.550 billion bushels, in a survey of 13 estimates. Stocks as of Dec. 1 2006 totaled 8.933 billion bushels.

 

The USDA is scheduled to release the reports Friday at 8:30 a.m. EST (1330 GMT).

 

Spillover weakness from the other grains and the inability of crude oil and precious metals to hold onto their overnight strength also kept some buyers on the sidelines, a trader said.

 

An announcement by the USDA ahead of the day session opening that Egypt bought 120,000 metric tonnes of U.S. corn and South Korea bought 110,000 tonnes of corn had little market impact.

 

Despite talk that index funds would continue to add to corn futures positions to their indices, there was little commodity fund buying with fund buying and selling estimated to be even on the day.

 

On daily technical charts, electronically traded March corn remained above its major moving averages with its 14-day relative strength index at 82.60.

 

In options trading, MF Global bought 15,000 March US$4.30 calls and sold US$15,000 March US$4.00 calls.

 

Oat futures settled lower, struggling all day on light commercial and fund selling, an analyst said.

 

March oats settled 5 cents lower at US$3.27 1/2 per bushel.

 

Ethanol futures ended mixed. February ethanol gained 0.008 cent to US$2.21 per gallon while March declined 1 cent to US$2.13.

 

The USDA is scheduled to release the weekly export sales report for the period ending Jan. 4. Analysts expect sales between 500,000 to 1.050 million tonnes.