February 7, 2007

 

CBOT Corn Review on Tuesday: Lower on speculative-led sales

 

 

Chicago Board of Trade corn futures ended lower Tuesday, backpedaling toward the lower end of the market's recent trading range on speculative-led selling pressure.

 

March corn ended 5 1/2 cents lower at US$3.96 1/2 per bushel, and December finished 3 1/2 cents lower at US$3.91 1/2.

 

The absence of fresh supportive news has created a repetitious cycle of sideways, range-bound trade, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

Speculative long liquidation continues to weigh on nearby contracts, driving prices into scale-down commercial buying, traders said. Meanwhile, deferred-month futures were lower, but did find support from the rolling of old-crop contracts into new-crop futures, traders added.

 

Technical selling added to the losses, with the ability of the March future to penetrate underlying support uncovering pre-placed sell orders. This was consistent, with many buyers content to sit on the sidelines in the absence of fresh supportive inputs to inspire upside movement.

 

The market is apparently stuck near the US$4.00-per-bushel level amid perceptions the price level currently satisfies the objective of buying enough 2007 corn acres and rationing demand to secure adequate supplies, said Kleist.

 

Otherwise, activity was light, with selling interest picking up down the stretch as speculative fund sales emerged to drag futures to session lows on the close. Meanwhile, light support was encountered from talk of increased feed usage in the midst of a central U.S. cold wave and scale-down commercial pricing beneath the market, traders added.

 

The DTN Meteorlogix weather forecast said that across the Midwest through the Northeast, the cold wave of early February promises to linger through the rest of this week. Meteorlogix calls for temperatures to continue in their below-average to much-below-average trend during the next five days. The next two days will bring light to moderate snow to the northern through the eastern Midwest. Several inches of snow are possible, notably in Illinois, Indiana and Ohio.

 

In Argentina, a moderate temperature pattern will continue this week in the central crop belt. During the coming weekend, additional showers will move into Argentina, generally favoring the southern half of the crop belt. This sector has the greatest need for rainfall, Meteorlogix said.

 

In pit trades, buyers were lightly scattered among various commission houses, with Man Financial a buyer of 500 December. On the sell side, Speculative fund selling was estimated between 7,000 and 8,000 lots. JP Morgan sold 500 March, 500 July and 600 December. Tenco sold 400 March and 500 July, Fimat sold 400 March. Rand Financial sold 800 March and 500 July, and UBS Securities sold 300 March and 300 December.

 

Day session volume on the e-CBOT platform was 104,388 contracts.

 

CBOT oat futures ended mostly lower, with speculative liquidation in the nearby March future featured. The new-crop December futures continues to encounter commercial hedging offset by speculative fund buying and the rolling of nearby positions into deferred months, traders said. March oats closed 3 3/4 cents lower at US$2.54 per bushel and December ended 1/2 cent lower at US$2.49 1/2.

 

Ethanol futures ended mixed, with the March contract settling US$0.015 higher at US$2.055, and the April contract settled 0.005 higher at US$2.005.