January 24, 2008

 

CBOT Corn Review on Wednesday: Limit-down on heavy speculative selling

 

 

Chicago Board of Trade corn futures ended limit down, 20 cents lower almost across the board, with spot-month March the only exception, as heavy speculative liquidation and technical selling pushed prices sharply lower, a commission analyst said.

 

CBOT March corn dropped 19 3/4 cents to US$4.69 1/4 per bushel, and December settled 20 cents lower at US$4.84. When trading closed there were 6,847 contracts to sell at limit down in December, and December was trading 1 cent lower in synthetic options activity, a trader said.

 

"Corn came under pressure early on the weakness in equities and the losses in crude oil, said Vic Lespinasse, an analyst at Illinois Grain.

 

March crude oil was down over US$2 per barrel when corn closed.

 

The market drifted lower early in the session, holding moderate losses but gained downside momentum near the close as spillover from heavy losses in soybeans kicked off speculative fund selling, thought to be technically related, Lespinasse said.

 

Soybean futures settled limit down across the board, with November settling 50 cents lower to 11.67 1/2 per bushel.

 

In open auction trading, commodity fund selling was estimated at 12,000 contracts.

 

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

 

Talk of improving weather forecasts in Argentina added to the negative tonnee, as did concerns about a global recession, the commission house analyst said.

 

Price direction Thursday will depend on whether speculative interests continue to sell, the trader said.

 

In options trading, UBS bought 3,000 July US$5.30 calls and sold 3,000 March US$4.80 puts and 3,000 March US$4.70 puts.

 

Oat futures finished lower on spillover from the steep declines set in the other grains, but "acted pretty well, considering the losses in the other commodities," a trader said.

 

March oats settled 5 1/2 cents lower at US$3.08 per bushel.

 

Ethanol futures closed lower. February ethanol ended 2 cents lower at US$2.18 per gallon while March closed 4 cents lower at US$2.11.