February 7, 2008

 

CBOT Corn Review on Wednesday: Lower in volatile, two-sided trade

 

 

Chicago Board of Trade corn futures ended moderately lower Wednesday after trading nearly limit up in early activity in a volatile, two-sided session.

 

March corn settled 7 3/4 cents lower at US$5.01 1/2 per bushel, and December fell 6 3/4 cents to US$5.25 3/4.

 

Corn rallied to the upside as spillover strength from the continued rally in U.S. wheat futures and speculative fund buying pushed prices higher, a commission house analyst said. Fresh all-time highs were set in several contract months, but the all-time high of US$5.54 1/2 per bushel, set in 1996, was not breached.

 

MGE March spring wheat futures settled at another all-time high, at US$14.93 per bushel, and nearby CBOT and KCBT wheat also ended 30 cents higher, making new all-time highs in some months.

 

Gains were further extended on spillover from a limit-up rally in soybean futures, the analyst said. March soybeans traded as high as US$13.73 per bushel, a new all-time high, but ended 4 1/2 cents lower at US$13.18 1/2.

 

However, corn began to retreat on the absence of further buying interest and slipped further when deferred CBOT wheat futures came off their upper level trading limit, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Technical selling added pressure as did a retracement in soybean values from earlier levels, Roose said. "Technically, the market had all the makings of an exhaustion blow-off top," he said.

 

Late in the session, corn turned weaker on market chatter that the U.S. government may postpone its ethanol mandate for one to two years, an analyst said.

 

On daily technical charts, March traded an "outside day," above and below the high and low established in Tuesday's session, and settled just above its 10-day moving average.

 

Market direction on Thursday will be depend upon what the speculative interests do after Wednesday's late price weakness, an analyst said. In addition, corn will be looking at wheat prices as well as the level of weekly export sales for direction, the analyst added.

 

The U.S. Department of Agriculture is scheduled to release the weekly export sales report for the period ended Jan. 31 at 8:30 a.m. EST (1330 GMT) on Thursday. Analysts forecast sales between 900,000 and 1.450 million metric tonnes. Last week, sales were 1.891 million tonnes.

 

In options trading, MF Global bought 3,000 July US$4.70 puts and sold 3,000 May US$4.00 puts. Rand Financial sold 1,000 March US$5.20 calls and 1,000 March US$5.20 puts.

 

Oat futures settled higher as fund buying and spillover buying from the rest of the grains boosted prices before a late retreat in corn and soybeans trimmed the gains, an analyst said. New life-of-contract-highs were set across the board.

 

March oats settled 1 cent higher at US$3.38 1/2 per bushel.

 

Ethanol futures ended mixed. March ethanol closed down 1.5 cents at US$2.08 per gallon while April ended 1 cent higher at US$2.10.