January 25, 2007

 

CBOT Corn Review on Wednesday: Corrects lower; lacks fresh bullish news

 

 

Chicago Board of Trade corn futures stumbled Wednesday, retreating on a profit-taking setback following a lack of bullish surprises in Tuesday evening's State of the Union address by President George W. Bush.

 

March corn ended 8 1/4 cents lower at US$4.00 3/4 cents per bushel, and December finished 5 cents lower at US$3.97 3/4.

 

The market spoke for itself in reaction to the President's address, staging a buy-the-rumor, sell-the-fact scenario, as a lack of any surprises in the speech encouraged traders to take some profits off the table, said market analyst Mike Zarembski of XPRESSTRADE in Chicago.

 

The market was bid up heading into the address, but with the speech failing to uncover any surprises, the market viewed the President's projections as targets that may not be realistic without significant funding from Congress to expand feedstock limitations on ethanol and biodiesel production, he added.

 

Meanwhile, the nearby March futures broke below the psychological US$4.00- per-bushel level during the session for the first time since the Jan. 12 gap- higher move propelled futures into a new upper trading range, a floor analyst said.

 

The market was perceived as overbought on its recent spike-higher moves, overdue for a minor correction. The theme was consistent from the outset, but bullish long-range demand profiles and the need to keep prices at levels that will help secure adequate 2007 acreage and ration some use for the end of the year limited declines, analyst said.

 

Despite the orderly setback in prices, bullish traders were encouraged by the market's ability to settle above the US$4.00-per-bushel level in the nearby future, stating it displayed a formidable support level, a CBOT floor analyst said.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report for week ended Jan. 21. Analysts surveyed by Dow Jones Newswires anticipate commitments in the range of 800,000 to 1,000,000 metric tonnes. USDA said 1,573,100 metric tonnes of U.S. corn was sold in the prior week's report.

 

The DTN Meteorlogix Weather Service forecasts said South American crop areas continue to enjoy a generally favorable weather pattern. Periodic showers will occur in both Brazil and Argentina, along with temperatures of normal to above-normal values, during the balance of this week.

 

In other news, sowing for Mexico's 2006-07 fall-winter harvest of white corn in the key grains state of northern Sinaloa is forecast to rise 1.7% to a total 426,064 hectares, the Agriculture Ministry's statistical arm SIAP said Wednesday. This compares to 418,829 hectares planted in the last 2005-06 fall-winter harvest in Sinaloa, which ended with total production reaching 4,115,458 metric tonnes of white corn, SIAP said in its latest harvest update.

 

In pit trades, JP Morgan bought 1,500 March and 900 July, FCStonnee bought 500 July and UBS Securities bought 600 March.

 

ADM Investor Services sold 1,000 March, Fimat sold 400 March and 2,000 July, JP Morgan sold 400 March and 800 December, UBS Securities sold 500 December and Fortis sold 400 March. Speculative funds were estimated sellers of near 10,000 contracts.

 

Day session volume on the e-CBOT platform was 108,160 contracts.

 

CBOT oat futures ended lower across the board, pressured by speculative sales. Technical weakness and spillover pressure from neighboring grain futures weighed on prices. March oats closed 4 3/4 cents lower at US$2.63 1/4 per bushel and May ended down 3 cents lower at US$2.71 1/2.

 

Ethanol futures ended higher, with the February contract settling .040 higher at US$1.93, and the March contract settled 0.035 higher at US$1.913.