March 1, 2006

 

CBOT Corn Review on Tuesday: Mixed in choppy, two-sided trade

 

 

Chicago Board of Trade corn futures ended narrowly mixed Tuesday, finishing near unchanged in a choppy, two-sided session that failed to produce any sustainable momentum in either direction.

 

CBOT March corn finished 1/2 cent higher at US$2.28, and May ended 1/4 cent lower at US$2.38 3/4 per bushel.

 

Overall the market had an uneventful day, filled with back-and-forth, choppy action throughout, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

However, the market held up pretty well in the face of bearish supply-side fundamentals, with strong technical chart patterns and a smattering of speculative fund buying keeping futures underpinned, he added.

 

The market's highs and lows were in place in the first half hour of trading, with prices jockeying up and down within narrow ranges for the remainder of the day. Scattered options-related activity helped provide liquidity in the market as well, traders said.

 

After strong technical closes in previous sessions and the inability of the market to stage any meaningful correction, traders were unwilling to press the market, with speculative fund-buying potential lying in the wings keeping sellers a bit hesitant, traders added.

 

On the flip side, corn failed to attract aggressive buying, with bird flu concerns, abundant nearby supplies and meaningful resistance resting above the market, limiting upside momentum.

 

Nevertheless, the large deliveries and continued reports of bird flu outbreaks failed to surprise traders, and futures were able to sustain their early lows on local buying and speculative buying from Fimat.

 

The market has underlying support, pointing to possibly better domestic demand than the U.S. Department of Agriculture's supply and demand report shows based on price strength, as futures are holding up well even without strong fund buying that buoyed prices previously, added Scoville.

 

In deliveries, a total of 2,017 delivery notices were posted against the March future. Principal issuers included the house account at ABN Amro with 992 lots, the house account at Tenco with 408 lots and a customer account at RJ O'Brien issuing 481 lots. The primary stopper was a customer account at O'Connor stopping 1,175 lots. The last date assigned was Nov. 29, 2005.

 

In pit trades, Calyon Financial and O'Connor each bought 600 May, Fimat bought 2,000 May, RJ O'Brien bought 600 March, Man Financial and Citigroup each bought 300 May. On the sell side, Citigroup sold 800 May, Refco sold 300 May and Tenco sold 400 December.

 

In options, the Refco division of Man Financial bought 2,000 July US$2.40 puts, sold 2,000 July US$2.20 puts and sold 2,000 July US$2.30 calls. ADM Investor Services bought 2,000 December US$2.40 puts and sold 2,000 US$3.00 calls.

 

Ethanol futures ended lower across the board, with the March future settling 8 cents lower at US$2.42 and April ethanol ended 6 cents lower at US$2.42 per gallon.

 

Oat futures ended lower, continuing its correction from prior gains. CBOT March oat futures settled 6 cents lower at US$1.82 and May oats ended 5 3/4 cents lower at US$1.86 1/4 per bushel.