March 5, 2008

 

CBOT Corn Review on Tuesday: Lower on spillover, but trims losses late

 

 

Chicago Board of Trade corn futures settled lower Tuesday, but well above limit-down levels reached late in the day as a short-covering rally in the final minutes of trade trimmed the losses.

 

May corn settled 12 cents lower at US$5.54 1/2 per bushel, and December fell 9 cents to US$5.67.

 

Heavy losses in the other grains and in "outside" inflationary markets pushed corn lower, an analyst said.

 

Nearby crude oil was over US$3 per barrel lower when corn closed with silver falling over 30 cents an ounce and gold ending over US$17 per ounce lower.

 

The sell-off in crude oil and precious metals contributed to the decline in commodities and corn was "no exception," the analyst said.

 

Spillover selling from the soy complex market with limit-down losses in soyoil and heavy declines posted in soybeans added to the downward pressure, said Brian Hoops, president of Midwest Market Solutions.

 

May soybeans settled 48 3/4 cents lower at US$15.10 3/4 per bushel and May soyoil ended limit down, 200 points lower at 68.82 cents per pound.

 

Technical selling near US$5.50 in May added to the weakness, a trader said.

 

"It appears that the commodity bubble has temporarily burst," the trader said.

 

There was no change in corn's fundamental outlook, but the influence of the outside markets and soybeans led to fund profit-taking, said Hoops.

 

In open auction trading, commodity fund selling was estimated at 6,000 contracts.

 

The lack of additional selling near the close led some participants to even up their positions, and buying in wheat added to the late rebound in corn, a commission house analyst said.

 

On daily open auction technical charts, May corn filled to the downside the upside price gap created on Monday and briefly traded below its 10-day moving average.

 

In options trading, MF Global bought 1,000 April US$6.00 calls and sold 1,000 April US$5.30 puts. Tenco bought 1,000 July US$7.00 calls.

 

Price direction Wednesday will depend on what happens in overseas markets as well as what happens in the "outside" markets, the commission house analyst said.

 

Oat futures ended sharply lower, but settled above limit down, or 20 cents lower, reached in some months. Commodity fund selling thought to be profit-taking and commercial selling pushed the market sharply lower, a trader said. Spillover from the other grains and outside markets added to the weakness, the trader said.

 

May oats settled 19 cents lower at US$4.26 3/4 per bushel.

 

Ethanol futures settled lower. March ethanol slipped .001 cent to US$2.400 per gallon and April fell 8.2 cents at US$2.318.