February 14, 2006

 

CBOT Corn Review on Monday: Lower on spec, local sales

 

 

Corn futures on the Chicago Board of Trade ended marginally lower Monday, carving out modest declines on speculative and local selling pressure.

 

CBOT March corn finished 1/2 cent lower at US$2.20 3/4, and May ended 1/2 cent lower at US$2.31 1/4 per bushel.

 

The combination of fund selling and the influence of outside markets, with gold down overnight and early in the session set the stage for the declines, said Vic Lespinasse of A.G. Edwards and Sons in Chicago.

 

Follow-through pressure from Friday's technically weak close enabled futures to establish session lows in the first 30 minutes of the trade. A quiet news front, the absence of speculative fund buying and mixed signals from corn and wheat allowed prices to hover in a narrow range for most of the day, until end-of-session positioning emerged to trim declines down the stretch.

 

Fundamentally, the market remains under pressure from abundant supplies, and without fund-backed buying, futures are having trouble finding upside momentum, said a CBOT commission house broker.

 

Otherwise, activity was relatively quiet, with bullish traders optimistic amid the March contract's inability to settle below support at the US$2.20 price level after stumbling below the mark earlier in the day.

 

Traders said dry weather conditions in Argentina continue to exert mild concerns, but with the corn crop far enough along in its growth cycle, South American weather has taken a back seat in the corn market.

 

The DTN Meteorlogix forecast calls for minimal precipitation to develop this week in Argentina and Brazil. Upper-atmosphere analysis shows a ridge of high pressure forming in Uruguay through east-central Argentina, which leads to moisture flowing south from the tropics being "walled off" in its movement toward Rio Grande do Sul in southern Brazil, as well as Argentina. The presence of this ridge makes only light precipitation available to Rio Grande do Sul, and almost no moisture available to Argentina during the next week.

 

Meanwhile, U.S. Department of Agriculture said corn inspected for export in the week ended Feb. 9 totaled 29.081 million bushels, down 25% from last week. Analysts expected corn inspections in a range of 27 million to 36 million bushels. Accumulated corn export inspections for the 2005-06 marketing year total 810.406 million bushels, up 2.3% from last year's 792.335 million at the same time

 

In pit trades, Fimat bought 300 July, Tenco bought 1,100 March and DT Trading bought 500 March. On the sell side, JP Morgan and Man Financial each sold 1,000 March, Citigroup sold 300 May, Tenco sold 600 May, and UBS Securities sold 300 March and 400 September. Commodity fund selling was estimated near 3,000 contracts.

 

Ethanol futures ended mostly flat, with the March future settling unchanged at US$2.73 per gallon. CBOT reported Monday, ethanol futures set a new open interest record Friday at 908 contracts.

 

Oat futures ended lower across the board, as speculative selling kept futures in tune with the weak tonnee in wheat and corn. CBOT March oat futures settled 1 3/4 cent lower at US$1.89 3/4 and May oats ended 2 1/2 cents lower at US$1.88 1/2 per bushel.