January 30, 2007

 

CBOT Corn Review on Monday: Consolidates down; lacks fresh news

 

 

Chicago Board of Trade corn futures ended lower Monday, continuing their consolidation setback in the absence of fresh supportive news to inspire buyers, analysts said.

 

March corn ended 5 1/2 cents lower at US$4.00 per bushel, and December finished 4 cents lower at US$3.94 1/2.

 

The lack of upside movement brought near term technical objectives into play, with the back filling of prices into gaps left on daily bar charts from Jan. 12 featured, said John Kleist of Top Third Ag Marketing in Chicago.

 

Traders said with a heavy buildup of speculative length in the market, the market needs to feed bullish enthusiasm to keep prices charging higher, and without that stimulus, consolidation was the theme of the day.

 

Liquidation of March positions as the contract gets closer to delivery kept a defensive tonnee in the market, while downside pressure remained limited by long range demand prospects, traders added.

 

Nevertheless, the continuation of consolidation sales remained the feature of the market, with futures showing signs of upside exhaustion in what is typically deemed a dull part of the year, with spring plantings still 2 months away, traders said.

 

However, underlying demand and the ability of nearby corn futures to settle at or above the psychological support levels over the course of the consolidation phase shows solid underlying support in the market looking forward, a market technical said.

 

U.S. Department of Agriculture said U.S. corn inspected for export in the week ended Jan. 25 totaled 35.885 million bushels. The inspections are a 15.2% decline from the previous week's 42.306 million bushels. Pre-released trade estimates from analysts surveyed by Dow Jones called for inspections in the range of 36 million to 50 million bushels. Accumulated corn inspections for the 2006-07 marketing year total 876.758 million bushels, up 18.1% from the 742.194 million bushels reported at the same time last year.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said Central crop areas of Argentina got some scattered rainfall of up to three-quarters inch over the weekend. The western and south-central areas (in Cordoba and La Pampa provinces) will see some isolated thundershowers Monday, but will be mostly dry Tuesday and Wednesday. Temperatures are expected to be mostly above normal, Meteorlogix said.

 

In pit trades, JP Morgan bought 800 December, Rand Financial bought 1,000 December, UBS Securities bought 500 December and Goldenberg Hehmeyer bought 300 December.

 

On the sell side, Man Financial sold 4,000 December, Iowa Grain sold 1,100 December, Fimat sold 500 July and Citigroup sold 300 July. Speculative fund selling was estimated at 9,000 contracts.

 

Day session volume on the e-CBOT platform was 108,704 contracts.

 

CBOT oat futures ended mostly lower, with fund liquidation in the nearby March future a featured attraction. The funds liquidated March, with prices falling to 2 1/2 week lows as the market satisfied a near term technical objective of filling a chart gap left from Jan. 12, traders said. On the other hand, speculative funds continue to buy the new crop December contract, with speculative traders rolling out of the March futures into the December future, traders said. Commercial hedging was reported in December futures aas well. March oats closed 3 3/4 cents lower at US$2.58 1/2 per bushel and December ended 3/4-cent lower at US$2.48 3/4.

 

Ethanol futures ended higher, with the February contract settling US$0.005 at US$1.945, and the March contract settled 0.020 higher at US$1.92.