February 6, 2007

 

CBOT Corn Review on Monday: Mostly flat in quiet two-sided action

 

 

Chicago Board of Trade corn futures ended a two-sided session mostly flat Monday, after struggling to find lasting direction in the absence of fresh fundamental news.

 

March corn ended unchanged at US$4.02 per bushel, and December finished 2 1/4 cents lower at US$3.95.

 

The market initially climbed on follow through technical buying from overnight trade, but without anything fundamental to support the higher theme, futures quickly backpedaled from the gains, said Chad Henderson, analyst with Prime Agricultural Consultants Inc. in Brookfield, Wis.

 

Futures are dealing with old supportive information, and without a new spark, traders are unwilling to take prices to uncharted territory, analysts said. The market continues to hover within a trading range, seemingly waiting for fresh news to inspire traders as they await planting outlooks in March, analysts added.

 

There continues to be uncertainty in regards to long term supply and demand issues, and with that in mind no one wants to sell the market short, said Roger Knapp, analyst with STA Trading Services in Memphis, Tenn. The market has a good fundamental foundation under it, and that is promoting the sideways theme, as buyers aren't in a hurry to bid prices much higher without fresh news, Knapp added.

 

Meanwhile, further support was generated from outlooks for increased livestock feedings during a central U.S. cold wave, while improved crop conditions in Argentine applied light pressure, traders said.

 

The DTN Meteorlogix weather forecast said the coldest temperatures of this winter season continue to grip the Midwest through the northeastern U.S. during the first part of this week. Temperatures are running from 10 to 25 degrees Fahrenheit below average. Only slight moderation in this cold-weather pattern will occur before next weekend. The forecast calls for temperatures to remain in the below-normal to much-below-normal category during the next five days. The cold weather will be stressful to livestock, and will lead to greater demand for energy for heating in the central through northeastern U.S.

 

In Argentina, rains of more than one inch occurred over the weekend, and there is a very good prospect for widespread significant rainfall during the Thursday through Saturday time frame this week. Crop weather for corn and soybeans remains very favorable across South America, Meteorlogix reports.

 

U.S. corn inspected for export in the week ended Feb.1 totaled 32.315 million bushels, the USDA reported Monday. The inspections are a 10.8% decline from the previous week's 36.234 million bushels. Pre-released trade estimates from analysts surveyed by Dow Jones called for inspections in the range of 35 million to 40 million bushels.

 

In pit trades, buyers and sellers were lightly scattered among various commission houses, with JP Morgan buying 400 March, and Fimat a buyer of 200 December. ADM Investor Services sold 200 July and 400 December, Man Financial sold 300 March, UBS Securities sold 300 December, and Rand Financial sold 400 March.

 

Day session volume on the e-CBOT platform was 71,838 contracts.

 

CBOT oat futures ended mostly flat in lackluster trade, traders said. The trend in the market remains consistent, fund long liquidation in the nearby March is being offset by commercials covering shorts, a CBOT trader said. In contrast, commercial hedging in new crop December continues to find offsetting interest from fund buying, he added. March oats closed 1/4-cent lower at US$2.57 3/4 per bushel and December ended 1/2-cent lower at US$2.50.

 

Ethanol futures ended higher, with the February contract settling US$0.060 higher at US$2.085, and the March contract settled 0.055 higher at US$2.040.