February 1, 2007

 

CBOT Corn Review on Wednesday: Down on end-day, end-month position squaring

 

 

Chicago Board of Trade corn futures ended slightly lower Wednesday, easing back from earlier gains on local selling and end-of- the-day and -month position squaring.

 

March corn ended 3/4 cent lower at US$4.04 per bushel, and December finished 3 cents lower at US$3.94 3/4.

 

The market was bracing for continued speculative buying that underpinned prices for most of the day, but once that buying was exhausted, locals ran for cover down the stretch, a CBOT floor analyst said.

 

Despite the late setback, the market continued to exude bullish sentiment, with speculative and commercial buyers content to buy into the market as March futures drift toward the psychological US$4.00-per-bushel level, traders said.

 

Otherwise, overall activity was relatively subdued, with a bounce-higher move in crude oil futures providing support to the market. In the absence of fresh fundamental news, the market tends to look to outside markets for direction, analysts said.

 

Cold central U.S. temperatures are seen promoting increased livestock feedings. This provided light support to corn, but without fund buying down the stretch, futures were vulnerable to late position squaring, traders added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said extreme cold is in the forecast for the eastern Midwest, possibly down to 10 degrees below zero for northern areas - Wisconsin, Michigan and northern Illinois. Argentina has been mainly dry, which is expected to continue through Friday into Saturday, when some isolated showers may appear. Temperatures have been high, and they are expected to stay in the 90s, and some areas will experience triple digits by the weekend, Meteorlogix reports.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report 7:30 a.m. CST (1330 GMT). Analysts surveyed by Dow Jones Newswires anticipate commitments in the 600,000- to 1,000,000-metric-tonne range. Traders and analysts are expected to pay close attention to the report for signs high prices are rationing demand, a CBOT floor analyst said.

 

In pit trades, JP Morgan bought 500 December, Fimat bought 300 March and 400 December, UBS Securities bought 400 May and 500 July and RJ O'Brien bought 300 March and 300 December.

 

On the sell side, sellers were widely scattered among various commission houses, with Rand Financial a featured seller of 900 December, and UBS Securities selling 500 March. Speculative funds were estimated buyers of 4,000 contracts.

 

Day session volume on the e-CBOT platform was 116,115 contracts.

 

CBOT oat futures ended mixed, with nearby futures pressure by spread rolling, while the new-crop December future remains supported on speculative fund buys. Traders said speculative funds 3,000 March futures on spreads, liquidating about half the open interest in the contract. Spreads were the featured attraction except for large fund buys in new-crop December. March oats closed 2 cents lower at US$2.57 1/4 per bushel and December ended 1/4 cent higher at US$2.49 1/2.

 

Ethanol futures ended mixed, with the February contract settling US$0.005 lower at US$1.980, and the March contract settled 0.020 higher at US$1.97.