February 2, 2007

 

CBOT Corn Review on Thursday: Lower on speculative, technical sales

 

 

Chicago Board of Trade corn futures ended lower Thursday, backpedaling on local and speculative sales amid a lack of fresh news and technical pressure.

 

March corn ended 6 cents lower at US$3.98 per bushel, and December finished 2 1/4 cents lower at US$3.92 1/2.

 

The market tends to go through this setback every couple of days as it consolidates within the confines of its recent trading range, said John Kleist, a senior analyst with Top Third Ag Marketing in Chicago.

 

Buyers seemingly got a little hesitant to push prices without fresh supportive news, traders said. The ability of the nearby contract to penetrate support at the psychological US$4.00 per bushel level uncovered technical selling to firmly plant prices in negative territory.

 

The March future settled below the US$4.00 level for the first time since January 12. This on the surfaced looks a little defensive for the market, but unless the March futures takes out the swing low of US$3.96, it looks like a consolidation setback, traders added.

 

Meanwhile, the market still has overtly bullish long-term sentiment, but the recent run to contract highs is showing signs that the market has done its job, Kleist said. The market continues to field preliminary acreage estimates from 7 million to 10 million acres above last year, and with talk of livestock numbers decreasing and export sales showing cracks around the edges, futures may have found a range that accomplishes near term objectives, Kleist added.

 

The market is seemingly hanging around a range to discourage any changes in market opinions with traders keeping a close eye on demand for signs of rationing, analysts added.

 

The U.S. Department of Agriculture said net weekly export sales for corn were 798,800 metric tonnes. Sales of 2006-07 totaled 797,300 tonnes, down 20% from the prior week and 23% under the prior 4-week average. Trade estimates called for commitments in the 600,000 to 1,000,000 tonne range.

 

In pit trades, ADM Investor Services bought 1,500 March, Tenco bought 1,000 March, and Man Financial bought 400 March.

 

Fimat sold 3,300 March, JP Morgan sold 400 March and 500 December, Rosenthal sold 500 December and Tenco sold 400 December.

 

Day session volume on the e-CBOT platform was 114,052 contracts.

 

CBOT oat futures ended mixed, with old and new crop months diverging over price direction. It's the same old story, liquidation in the March contract with speculative fund buying in the new crop December futures, said a CBOT trader. Old crop contracts are losing ground to deferred contracts. Farmer hedging is seen in the December contract, so there is stuff for sale, but the funds keep coming in and buying it, the trader added. March oats closed 1/4 cent lower at US$2.57 per bushel and December ended 1 cent higher at US$2.50 1/2.

 

Ethanol futures ended higher, with the February contract settling US$0.030 higher at US$2.01, and the March contract settled US$0.010 higher at US$1.98.