January 30, 2008

 

CBOT Corn Review on Tuesday: Mixed; wheat slide weighs on nearby months

 

 

Chicago Board of Trade corn futures ended mixed Tuesday in a choppy session as corn took its direction from the other grains.

 

CBOT March corn settled 1 1/4 cents lower at US$5.01 per bushel and December ended 1/4 cent higher at US$5.10 3/4.

 

Corn's recent price strength has been tied to wheat and when wheat declined, corn followed, said John Kleist of Kleist Ag Consulting.

 

CBOT March wheat, which traded as high as US$9.92 1/2 per bushel early in the session, settled 19 cents lower at US$9.44. The volatility in wheat, however, limited the downside in corn as participants were reluctant to press the corn market further, said Kleist.

 

The downside was also limited by the steady tonnee in crude oil futures and moderate gains in nearby soybeans, a commission house analyst said. Corn isn't going to trade "too much lower if soybeans are higher, given the need to retain acres this year," the commission house analyst said. March soybeans settled up 13 cents at US$12.66 3/4 per bushel.

 

Light bear market spreading also kept nearby corn weak and provided some support for deferred contracts, as concerns about future inflation kept the distant deferred months supported, the analyst said.

 

Market activity in corn Wednesday will be subdued as participants will wait and see the Fed's decision on interest rates, a broker said.

 

On daily technical charts, electronically traded March corn remained above its major moving averages.

 

In pit trading, commodity fund selling was estimated at 2,000 contracts.

 

In options trading, MF Global bought 1,000 March US$4.40 calls and sold 1,000 September futures.

 

Oat futures settled with thin gains in light activity, ignoring the weakness in wheat, a trader said. Light fund buying underpinned the market but commercial selling helped cap the upside, the trader said.

 

March oats ended 1 1/4 cents higher at US$3.24 1/4 per bushel.

 

Ethanol futures ended lower. February ethanol closed down 1.2 cents at US$2.19 per gallon while March closed 2.5 cents lower at US$2.11.