February 6, 2008

CBOT Corn Review on Tuesday: Flat; wheat trumps outside markets

 

 

Chicago Board of Trade corn futures settled unchanged to slightly lower Tuesday despite a steep outside market sell-off and sharply lower equity markets, as spillover strength from surging U.S. wheat prices underpinned corn, an analyst said.

 

March corn settled 1/4 cent lower at US$5.09 1/4 per bushel, and December slipped 1/2 cent to US$5.32 1/2.

 

"Corn's performance was impressive Tuesday," said Vic Lespinasse, analyst at Illinois Grain.

 

Crude oil ended at a 2-week low, March gold settled over US$18 per ounce lower and the dollar was sharply higher versus other currencies. In addition, equities were sharply lower with the Dow nearly 300 points lower when grains closed.

 

"Corn had every excuse to give back Monday's gains but it didn't as it has strong underlying support," said Lespinasse.

 

Nearby U.S. wheat futures settled limit up at all three U.S. wheat markets, with MGE spring wheat futures setting another new all-time high at US$14.63 per bushel. CBOT March settled at US$10.03 and KCBT March ended at US$10.50 1/4.

 

Activity in corn was choppy but as long as wheat held its gains, corn wasn't going to break, a commission house analyst said. Although fund activity was mostly absent Tuesday, some participants began to even up positions ahead of Friday's supply/demand report, the commission house analyst said.

 

On daily technical charts, March remained above its major moving averages. The 14-day Relative Strength Index in March ended at 66.14.

 

Price direction on Wednesday will again be determined by what happens in outside markets, wheat and by any additional pre-report positioning, a trader said.

 

In options trading, JP Morgan sold 2,500 December US$5.10 calls. Fortis bought 1,000 July US$4.80 puts and sold 1,000 July US$5.20 calls.

 

Oat futures ended modestly higher as a supportive Canadian oat stocks figure led to speculative buying, a trader said. Light commercial hedging, however, helped offset some of the gains, the trader said.

 

March oats settled 2 cents higher at US$3.37 1/2 per bushel.

 

Ethanol futures settled lower. February ethanol ended down 1 cent at US$2.14 per gallon while March settled 2.4 cents lower at US$2.095.