February 16, 2007

 

CBOT Corn Review on Thursday: Mixed; spreads weigh on nearby contracts

 

 

Chicago Board of Trade corn futures settled mixed Thursday, with early gains evaporating as bear market spreading supported the deferred months and weighed on the nearby contracts, floor sources said.

 

March corn settled 3/4 cent lower to US$4.07 1/2 per bushel and May also fell 3/4 cent to US$4.20.

 

"I'm cornfused," a floor trader quipped, referring to market activity.

 

July-December spread liquidation pressed the nearby months while supporting the deferred, a floor source said.

 

Inter-commodity spread unwinding was the feature, said Jason Britt an analyst with Central States Commodities in Kansas City, Mo.

 

Participants were unwinding their corn-soybean and corn-wheat spreads which kept corn grounded, though it appears that support near US$4.05 in the March limited the losses, the floor source added.

 

People looked at the baseline projections released Wednesday by the U.S. Department of Agriculture and thought the market would rally. When that didn't happen, it encouraged people to sell, a commission house broker said.

 

The lack of fresh export news limited trading, with the USDA delaying the weekly export sales report until Friday due to the weather in Washingtonne D.C.

 

The markets near-term technical pattern is bearish while the longer-term fundamentals are bullish, but the technical pattern dictated market activity for much of Thursday's trade, the broker added.

 

Short covering near the close helped limit the losses in the nearby months as March held near-term support, the broker added.

 

On day-session technical charts, March corn remained above its major moving averages.

 

Buyers on Thursday included Man Financial, which bought 200 December, while JP Morgan sold 600 December and UBS sold 500 March and 400 July.

 

Commodity fund selling was estimated at 2,500 contracts.

 

In spread trading Iowa Grain bought 2,300 July-May.

 

Oat futures settled lower as fund selling in the deferred contracts undermined prices with the nearby months continuing their recent weaker tonnee, a floor trader said. Funds sold the back months early, but were buyers late in the day, trimming the losses, he said.

 

March oats declined 3 1/4 cents to US$2.37 1/2 per bushel and May settled down 2 1/4 cents to US$2.46 1/4.

 

Ethanol futures ended slightly higher in modest trade. The March contract gained 3.5 cents to US$2.08 per gallon. The April contract settled 2 cents higher at US$2.02 per gallon.

 

On Friday, the USDA is scheduled to release the weekly export sales report for the week ended Feb. 8 at 8:30 a.m. EST (1330 GMT). Analysts expect corn sales between 700,000 and 1.0 million metric tonnes.