March 7, 2006

 

CBOT Corn Review on Monday: Lower; speculative sales, bird flu, rains press

 

 

Corn futures on the Chicago Board of Trade started the week on the defensive, stumbling lower Monday on speculative sales, weakness in other commodities, improved moisture prospects for the Midwest and bird flu concerns.

 

CBOT March corn finished 5 3/4 cents lower at US$2.23, and May corn ended 6 3/4 cents lower at US$2.32 3/4 per bushel.

 

Corn was down in line with other commodities, pressured by active fund selling, improved soil moisture potential heading toward spring plantings and concerns over the spread of bird flu globally, said a CBOT commission house broker.

 

The lower theme was consistent from the outset, with futures staging a correction from previous gains, unable to find significant buying amid an absence of supportive features. The market encountered sell stop orders, with declines accelerating once May futures breached support at last week's low and its 200-day moving average.

 

Corn was previously supported by wheat strength, but with that market stumbling on weather and news of Iraq buying wheat from other countries, corn was overdue for a setback, traders said.

 

Meanwhile, forecasts for rain in the Midwest this week and next week - seen improving soil conditions heading into the planting season - applied mild pressure. In addition, news that hundreds of birds were found dead in Argentina raised concerns that bird flu may be moving closer to the United States. However, Argentina said the birds did not appear to have been stricken by Avian flu.

 

The lower theme continued into the close, with Fimat and JP Morgan active sellers down the stretch, traders said. Otherwise, futures suffered from a lack of buyers on the day, with good size buying from Cargill in May unable to offset fund selling pressures.

 

The DTN Meteorlogix forecast calls for showers and a few thundershowers to develop in the main Midwestern corn belt during this week, with precipitation of up to one inch possible in eastern Nebraska, Iowa and northern Missouri. This rainfall would be very timely for some soil moisture recharge ahead of spring field work. The potential rainfall would be in addition to showers from the past weekend, which brought one-half inch rainfall to both Des Moines and Peoria.

 

The U.S. Department of Agriculture said corn inspected for export in the week ended March 2 totaled 36.989 million bushels. The export figure was up 21.7% from last week's 30.400 million. Analysts expected corn inspections in a range of 28 million to 40 million bushels.

 

In pit trades, Cargill bought 3,000 May, Calyon Financial and Rand Financial each bought 400 May, and Fimat bought 600 May.

 

On the sell side, ABN Amro sold 1,500 May, JP Morgan sold 1,500 May, Citigroup sold 2,000 July, Fimat sold 2,500 May and 1,500 July, Goldenberg Hehmeyer sold 1,500 May, Refco sold 1,000 May and UBS Securities sold 800 May. Commodity fund selling was estimated between 12,000 and 13,000 contracts.

 

Ethanol futures ended fractionally lower, with the April ethanol contract ending 1/2 cent lower at US$2.40 per gallon.

 

Oat futures ended mostly lower, in step with other grains, with the nearby March future advancing on spread relationships. CBOT March oat futures settled 1 cent higher at US$1.84 while May oats ended 2 cents lower at US$1.87 1/2 per bushel.