January 17, 2008

 

CBOT Corn Review on Wednesday: Weaker; profit-taking, outside markets weigh

 

 

Chicago Board of Trade corn futures settled lower Wednesday but well off levels reached earlier in the session as profit-taking and technical selling pressured prices, an analyst said.

 

March corn settled 6 1/2 cents lower at US$5.02 1/2 per bushel and new-crop December ended 7 3/4 cents lower at US$5.21 1/2.

 

"The profit-taking was precipitated by the usual suspects," a commission house analyst said. The outside markets were weaker and the weather outlook improved in South America, the analyst said.

 

Nearby crude oil pressed the market early but rebounded from its steep losses and was down over a US$1.00 per barrel lower when corn closed.

 

Rainfall overnight in parts of Argentina with additional rain forecast for Wednesday also limited buying interest, the commission house analyst said.

 

Speculative selling added to the weakness with commodity fund selling in open auction activity estimated at 11,000 contracts.

 

And, fears of a global economic slowdown added to the weak tonnee, a trader said.

 

"Corn has been severely overbought and was due for a technical correction," said Joel Karlin, an analyst at Western Milling in Goshen, Calif.

 

On daily technical charts, electronically traded March corn remained above its major moving averages but partially filled to the downside an upside gap created between Friday's and Monday's sessions.

 

A pullback in soybeans to lower levels also exerted downside influence on corn prices, the trader said. November soybeans fell 11 cents to US$12.74 per bushel.

 

Near midsession, corn began to stage a modest recovery from its lows on bottom picking and short covering, an electronic trader said.

 

Price direction on Thursday will depend on what happens in the overnight session; weather forecasts for South America; and the weekly export sales report, which is expected to report large corn sales, the electronic trader said.

 

Weekly corn export sales for the week ended Jan. 10 are expected between 1.4 million to 2.4 million metric tonnes. The U.S. Department of Agriculture is scheduled to release the report at 8:30 a.m. EST.

 

On daily technical charts, electronically traded March corn remained above its major moving averages.

 

In open auction trading, Fortis sold 1,200 July and 2,000 December.

 

In options trading, Citigroup sold 1,000 May US$4.20 calls and sold 1,000 July US$4.60 calls.

 

Oat futures settled moderately lower but off steep losses set earlier on fund selling in light trade, an analyst said. Spot-month March touched limit down but commercial buying helped oats cut their losses, the analyst said.

 

March oats settled 8 cents lower at US$3.21 1/2 per bushel.

 

Ethanol futures finished lower. February ethanol closed down 6.5 cents at US$2.185 per gallon while April closed 5.5 cents lower at US$2.09.