February 27, 2007

 

CBOT Corn Review on Monday: End lower; retreats on late profit taking

 

 

Chicago Board of Trade corn futures ended lower Monday, back tracking earlier gains on spec, local profit taking and hedge related pressure.

 

March corn ended 4 3/4 cents lower at US$4.25 1/2 per bushel, May corn settled 4 cents lower at US$4.38 1/2, and December finished 2 3/4 cents lower at US$4.18.

 

The inability of futures to find follow through buying on early price strength served as a sell signal to many traders, and with the emergence of South American hedge pressure, the market had little to underpin prices, analysts said.

 

The market rallied overnight in the absence of fresh fundamental news, and without a catalyst or aggressive speculative fund buying, futures easily fell prey to selling pressure down the stretch, a CBOT floor analyst said.

 

The market had come too far too fast, and traders took the opportunity to book a few profits ahead of this week's U.S. Department of Agriculture outlook conference. Lower than expected weekly export inspections aided the market's retreat, with traders looking at recharging Midwest soil moisture as a bearish feature particularly with the heart of the planting season still a month away.

 

Nevertheless, futures continue to draw support from concerns a wet spring could lead to planting delays, and with large fund length in the market, traders will remain sensitive to bullish developments, analysts added.

 

Meanwhile, the DTN Meteorlogix Weather forecast said this week brings additional precipitation chances, in the form of a weather system moving into the continental U.S. from the Pacific Ocean. The prospects for the Midwest are for rain and snow, with moisture of up to 1 inch, with widespread coverage across the region. Another round of snowfall ranging from 4 to 8 inches is also in store with this weather system. The recharge to soil moisture supplies, especially in the upper Midwest, will be significant.

 

A wet week is in store for Argentina. Rainfall will total up to 2 1/2 inches between Monday and Thursday of this week, with the Argentine producer in the midst of a very favorable round of late-summer weather, Meteorlogix reported.

 

U.S. corn inspected for export in the week ended Feb. 22 totaled 32.824 million bushels. The inspections are a 29.9% decline from the previous week's 46.843 million bushels. Analysts surveyed by Dow Jones estimated the inspections would fall within a range of 39 million to 47 million bushels.

 

In pit trades, JP Morgan bought 600 March and 500 May, Man Financial bought 500 May, and Rand Financial bought 300 March. ADM Investor Services, RJ O'Brien and Rand Financial each sold 1,000 December, Goldenberg Hehmeyer sold 1,000 May, JP Morgan sold 700 May and 500 July, and Fimat sold 500 May.

 

Day session volume on the e-CBOT platform was 159,433 contracts.

 

CBOT oat futures ended higher across the board Monday, managing to sustain price strength despite late pressure from neighboring grains. Technically inspired speculative buys underpinned futures in the absence of fresh fundamental news to direct prices, traders said. May oats closed 2 1/4 cents higher at US$2.60 per bushel and December ended 2 1/2 cents higher at US$2.52.

 

Ethanol futures ended higher, with the March contract settling 0.060 lower at US$2.200, and the April contract settling 0.052 lower at US$2.150.