January 19, 2006

 

CBOT Corn Review on Wednesday: Stumbles on fund, technical selling

 

 

Corn futures traded at the Chicago Board of Trade settled lower Wednesday, undermined by technical weakness, fund selling and the continued poor fundamental outlook, sources said.

 

March corn finished 3 cents lower at US$2.05 3/4 per bushel, May corn fell 2 3/4 cent to US$2.15 1/2, and July corn settled 3 cents lower to US$2.24 1/4 per bushel.

 

There wasn't much interest on the buy side today, a commission house analyst said. The funds were sellers, the technical picture looked weak and the poor fundamentals added to the lack of interest, he said.

 

The fundamentals aren't there to support the market, and as result corn is liquidating back to its line of support, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

During the recent rally, producers put much corn into the cash pipeline and now the market needs to work through it, Roose said.

 

On daily technical charts, March corn gapped open lower on daily technical charts and fell beneath its 50-day moving average.

 

March futures prices have steadily eroded over the last several trading days and haven't traded this low since mid-December.

 

Although weather forecasts predict mostly dry weather over the next several days in Argentina, recent rainfall has alleviated earlier concerns about the potential for crop stress due to hot and dry conditions, traders said. Argentina is a major competitor to the U.S. in export markets.

 

News from the U.S. Department of Agriculture that El Salvador purchased over 117,000 metric tonnes of U.S. corn and that South Korea had bought 110,000 metric tonnes before the opening had little market impact, sources said.

 

Buyers on Wednesday included ADM, which bought 500 March, Cargill bought 2,000 March and 100 July, Fimat bought 1,000 March, Tenco bought 1,000 May and 300 March and Man Financial bought 300 March.

 

Sellers Wednesday included ADM, which sold 1,500 March, Iowa sold 1,000 March, Rand Financial sold 1,000 March, Rosenthal sold 400 March, and the Refco division of Man Financial, which sold 2,000 March and 1,500 July.

 

Commodity fund selling was estimated at 7,000 contracts

 

Oat futures finished mixed with the March contract settling 3/4 cent lower at US$1.85 3/4.

 

Ethanol futures also ended mixed. The April contract didn't trade and slipped 1/2 cent to US$2.37 per gallon.

 

Weekly export sales, usually scheduled for release on Thursdays, will be delayed one day and are scheduled for release on Friday.