March 2, 2006

 

CBOT Corn Review on Wednesday: Down on wheat, technicals, spec sales

 

 

May corn on the Chicago Board of Trade fell Wednesday on the bearish influence of lower wheat and weak soybean prices, renewed concerns over avian flu and speculative sales after prices reached new swing highs this week, traders and analysts said.

 

Funds were net sellers of an estimated 1,000 contracts, which countered early speculative buying.

 

May corn lost 4 cents to US$2.34 3/4 a bushel and Mar was down 3 3/4 cents to US$2.24 1/4.

 

"Corn is in the throes of a general grain floor correction and it was tough for it to come up for air with the losses in wheat and the losses in the soybean meal pit," said independent agricultural analyst John Kleist.

 

Concerns over the continued spread of bird flu were rampant in the grain and soybean markets amid reports that officials in the Bahamas are now testing 15 dead flamingos for the deadly H5N1 virus. If confirmed, it would be the closest discovery of avian flu to U.S. shores.

 

Yet corn demand has continued strong in the face of bird flu findings around the world.

 

"As far as corn is concerned, bird flu concerns as of yet have not translated into lower export business, and that's the key for the corn market," Kleist said.

 

Weekly exports will be issued on Thursday as trade expectations are for 800,000 to 1.2 million tonnes sold, sources said.

 

If a number of 1 million tonnes or below is seen, however, it could be bearishly construed, after being in a "mini-demand-bull" market for a few weeks now, Kleist said.

 

Meanwhile, mostly favorable weather is forecast for South America's corn-growing regions, DTN Meteorlogix said.

 

The forecast for Argentina Wednesday through Friday calls for light showers, turning heavier by Friday, with below-normal temperatures. The weekend should remain dry and cooler.

 

In Brazil, isolated showers are forecast for Parana Wednesday and Thursday, while Rio Grande do Sul is expected to see scattered showers Friday and Saturday, Meteorlogix said.

 

Technically, May corn settled below its 10-day moving average, Kleist noted, but did hold above the 20-day at US$2.33 1/2.

 

Nearby technical resistance on May corn is met at US$2.38, US$2.39 3/4, US$2.43 1/4, then the gap that runs from US$2.43 1/2-US$2.44 3/4. The US$2.51-US$2.52 area serves as further resistance. Support is uncovered at US$2.34, US$2.33 1/4, US$2.30 and US$2.27 1/2.

 

A local trader was the largest seller, shedding 1,000 May contracts, Fimat and ABN Amro each sold 600 May, Prudential Financial and Citigroup Global Markets each sold 500 May, while other sellers were scattered.

 

Calyon Financial bought 2,000 May, JP Morgan bought a net 500 May and 600 March, Rosenthal bought 200 March and 200 May and UBS bought 200 May.

 

Spread trading was fairly active, with Refco spreading 3,000 May/December contracts.