January 23, 2008

 

CBOT Corn Review on Tuesday: Down; outside markets prompt speculative selling

 

 

Chicago Board of Trade corn futures settled lower Tuesday, dragged down by speculative liquidation after a global market sell-off in world equity markets overnight led to speculative selling, an analyst said.

 

March corn settled 9 1/4 cents lower at US$4.89 per bushel with new crop December ending 11 cents lower at US$5.04.

 

A surprise move by the U.S. Federal Reserve to cut the Fed funds rate by 75 basis points helped stabilize equity markets and several outside markets, ahead of the CBOT opening but did not have a big impact on corn.

 

The declines set in world equity markets led to speculative selling, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D. Commodity and index fund selling pushed corn lower with some speculators trimming their positions to build liquidity, he said.

 

A rally to sharply higher levels in wheat futures helped corn rally to near unchanged in some months, but the inability of nearby CBOT wheat to maintain those gains led to a retreat in corn values, a trader said. Outside market selling influence faded as the trading day continued and corn looked to wheat for direction, the trader said. CBOT March wheat which traded as high as US$9.86 1/2, and settled 28 1/2 cents lower at US$9.34.

 

The corn market has been trading money flow recently and some people wanted to liquidate positions given all the volatility, an electronic trader said.

 

In open auction trading, commodity fund selling was estimated at 6,000 contracts.

 

Corn's price direction Wednesday will be determined by equity and outside markets, and if the speculative interests continue to sell, a commission house analyst said.

 

On daily technical charts, electronically traded March corn settled below its 10-day moving average for the first time since Nov. 20.

 

In options trading, Tenco bought 2,000 May US$4.30 calls and sold 2,000 July US$4.40 calls.

 

Oat futures ended lower, dragged down by early spillover weakness from the rest of the grains and outside markets, an analyst said. However, there wasn't much selling pressure after the initial losses and oats staged a mild recovery, the analyst said.

 

March oats settled 6 cents lower at US$3.13 1/2 per bushel.

 

Ethanol futures closed lower. February ethanol closed 4 cents lower at US$2.20 per gallon while March closed 3.9 cents weaker at US$2.15.