March 8, 2006

 

CBOT Corn Review on Tuesday: Speculative sales extends Monday's downturn

 

 

Chicago Board of Trade corn futures ended lower Tuesday, grinding out new lows for the current move as the market extended Monday's setback on speculative selling.

 

CBOT March corn settled 2 cents lower at US$2.21, and May corn ended 2 1/4 cents lower at US$2.30 1/2.

 

The market continued its correction from recent highs amid the absence of fresh supportive news in the market, analysts said.

 

Light follow through selling from Monday set the tonnee from the outset, with bearish supply side fundamentals and improved soil moisture potential heading toward the planting season, amid improved rain potential for the Midwest this week into next week, kept buyers on the sidelines.

 

The market stumbled lower in light trade, establishing its morning highs and lows in the first half hour of the session. This continued, with prices settling into a narrow range until late spillover weakness from a break in soybean futures surfaced to attract local selling down the stretch. The late selling dragged futures to new lows on the close, but overall activity remained subdued.

 

Meanwhile, some traders remained encouraged by the markets ability to only absorb light losses in the face bearish supplies, but technical analysts say a close below technical support at US$2.30 basis May would generate some fresh downside technical momentum.

 

Otherwise, light trade positioning ahead of Friday's supply and demand report is expected to filter into the market over the next couple of days.

 

The average trade estimate from a Dow Jones Newswires survey pegged corn ending stocks at 2.342 billion bushels, down from the U.S. Department of Agriculture's February estimate of 2.401 billion.

 

The DTN Meteorlogix forecast calls for rainfall of up to one inch to develop from eastern Nebraska across most of Iowa, southeastern Minnesota, and northern Missouri late Tuesday and continuing through Thursday. East of the Mississippi River, rainfall of up to one and one-half inches is in store, with the heaviest amounts over southern Illinois through Indiana into Ohio. The rains will give a notable recharge to soil moisture in the U.S. corn belt ahead of spring field work, Meteorlogix said.

 

In pit trades, Calyon Financial, Fimat, Iowa Grain, Man Financial, O'Connor and Refco were featured buyers.

 

On the sell side, ABN Amro was featured seller of May futures, JP Morgan was an active seller of July, with Goldenberg Hehmeyer and Refco sellers of May. Commodity fund selling was estimated near 3,000 contracts.

 

Ethanol futures ended lower across the board. The April ethanol contract ended 2 cents lower at US$2.38 and May ethanol dropped 5 cents to US$2.34 per gallon.

 

Oat futures ended mostly higher, with the active May future supported by technical buying. CBOT March oat futures settled 3/4 cent lower at US$1.83 1/4 and May oats ended 1 1/4 cent higher at US$1.88 3/4 per bushel.