January 17, 2007

 

CBOT Corn Review on Tuesday: Mixed; retreats from limit-up gains

 

 

Chicago Board of Trade corn futures settled mixed Tuesday, retreating from the limit-up gains established in some months in overnight trade and in early pit activity as profit-taking and hedge-related selling in the new-crop contracts helped trim the early advances, sources said.

 

March corn settled 6 1/2 higher cents to US$4.03 per bushel and May corn gained 6 1/4 cents to US$4.13 3/4.

 

At one point during the session, March corn was 64 cents higher than its low reached on Wednesday. e-CBOT day session volume in March was 113,597 contracts.

 

Both the March and December contracts established new all-time highs in Tuesday's session.

 

Follow-through buying from steep gains set in overnight trade and from Friday's session helped futures rally to limit up in spot month March.

 

Fund buying also added to the early strength with overall commodity fund buying estimated at 10,000 contracts.

 

The gains eroded, however, as profit-taking entered the market after the early strength was unable to be maintained, sources said.

 

Cash market selling of the new crop increased as corn flirted around the US$4.00 mark which is "kind of a magical level," said Jason Britt, an analyst at Central States Commodities in Kansas City, Mo.

 

December corn fell 6 3/4 cents to US$3.87 3/4, after trading as high as US$4.03 in open auction trade and US$4.07 on e-CBOT, the first time in the history of the exchange that corn traded above the US$4.00 level, according to data on the CBOT Web site.

 

Corn has rallied sharply over the past several days and at these price levels the market is seeing some selling from nervous bulls as they take "some of their chips off the table," Britt said.

 

Sharply lower energy prices were cited by several floor traders as an additional factor, with crude oil down over US$2 per barrel when corn closed.

 

Export inspections data was released during the session and was within the range expected by analysts.

 

The U.S. Department of Agriculture reported that corn inspected for export totaled 33.410 million bushels, within the 26 million to 40 million bushels forecast. With the USDA reports out of the way, the trade will begin to focus on demand and whether the high prices have begun to ration corn exports, several analysts noted.

 

On day session technical charts, March corn gapped open higher for the third session in a row with March reaching a new all-time high of US$4.16 1/2, above its previous high of US$4.10 1/4 set on Nov. 28, 1980.

 

Buyers on Tuesday included ABN Amro, which bought 1,000 December, Iowa Grain, which bought 1,000 March and Man Financial, which bought 500 May and 300 March.

 

Sellers Tuesday included ADM, which sold 1,200 December, Fortis, which sold 3,000 March, Calyon which sold 500 March and Tenco, which sold 500 March and 300 December.

 

Oat futures ended lower as commercial and commission house selling weighed on the nearby months as did spillover weakness from lower wheat values, a floor trader said.

 

March oats declined 3 1/4 cents to US$2.69 per bushel and May fell 3 1/2 cents to US$2.75.

 

Ethanol futures settled lower in light trade. The February contract slipped 8.9 cents to US$1.99 per gallon. The March contract, which did not trade, fell 9.7 cents to US$1.93.