February 15, 2006

 

CBOT Corn Review on Tuesday: Ends down on spec sales in quiet trade

 

 

Chicago Board of Trade corn futures ended lower Tuesday, sustaining a defensive theme over the course of the day, pressured by speculative sales amid the lack of supportive features.

 

CBOT March corn finished 2 cents lower at US$2.18 3/4, and May ended 2 1/4 cents lower at US$2.29 per bushel.

 

The market continued its corrective measures from previous highs, as the absence of fresh market-moving news in the face of bearish supply-side fundamentals kept sellers in control of price direction, analysts said.

 

Technical weakness, the liquidation of March positions heading toward first notice day and spillover weakness from wheat aided the defensive theme for most of the day. However, overall activity remained subdued, with March futures confined within a narrow trading range after establishing the day's highs and lows early in the session.

 

Speculative selling was a featured attraction, with commodity funds key sellers. The ability of the March contract to eclipse resistance at Monday's lows uncovered fresh selling, but its inability to penetrate last week's low of US$2.17 1/4 attracted light buying to support the market.

 

This was consistent for the remainder of the day, with futures settling into a range, particularly after heavy selling pressure from JP Morgan was exhausted by mid-morning, traders said.

 

Otherwise, the market had few features, quietly biding its time with spreading activity uneventful as well, traders added.

 

Meanwhile, the DTN Meteorlogix forecast said the next seven days offer very little rainfall for Argentina and southern Brazil. There is a chance for scattered showers in Rio Grande do Sul, Brazil, Thursday into Friday. Temperatures will be very warm to hot, with highs in the mid-90s Fahrenheit this weekend.

 

A cold front is possible through Argentina into southern Brazil next week, with the prospect of at least moderate rainfall along with cooler temperatures.

 

In other news, as of Feb. 10 Argentina had sold 13.905 million metric tonnes of 2004-05 (March-February) corn for export, according to the latest Agriculture Secretariat data. By this time last year Argentina had sold 11.085 million tonnes.

 

In pit trades, FCStonnee sold 300 March, Calyon Financial sold 800 May, JP Morgan sold 2,500 July, Man Financial sold 500 March, Citigroup sold 300 May and Rand Financial sold 300 March. Man Financial and UBS Securities were key buyers. Commodity fund selling was estimated between 5,000 and 6,000 contracts.

 

Ethanol futures ended mostly lower, with the March future settling 8 cents lower at US$2.65 per gallon. CBOT reported Tuesday that ethanol futures set a new open-interest record Monday at 912 contracts.

 

Oat futures ended mixed, finding stability as the market consolidated within Monday's trading ranges. CBOT March oat futures settled 3/4 cent lower at US$1.89 and May oats ended unchanged at US$1.88 1/2 per bushel.