March 8, 2008

 

CBOT Corn Review on Friday: Plunges limit down on soy; speculative sales

 

 

Chicago Board of Trade corn futures settled limit down Friday, pressured by heavy losses in the soy complex as well as speculative selling amid economic concerns.

 

May corn settled 20 cents lower at US$5.47 1/4 per bushel, July ended down 20 cents at US$5.59 and Dec finished 20 cents lower at US$5.59.

 

At the close, May corn was trading 1 to 2 cents lower in synthetic options trading. Over 7,700 contracts were offered at limit down in May at the close.

 

"It was a broad-based commodity sell-off," said Shawn McCambridge, senior grain analyst at Prudential Bache.

 

Soybeans, soyoil and soymeal all settled limit down as continued that China might sell vegetable oil from state reserves pushed prices lower in overnight activity and that continued in daytime trade, a commission house analyst said.

 

Corn has rallied recently on the inflow of speculative money and it declined Friday as speculative money exited the market, the analyst said.

 

In open auction trading commodity fund selling was estimated at 10,000 contracts.

 

Corn's fundamental outlook hasn't changed, but some participants were nervous about the economy and decided to reduce their positions, said McCambridge.

 

The stock market was down hard, and Friday's economic reports point to a recession. In addition, talk that banks are reducing their credit lines to hedge funds is pushing the funds to reduce their most liquid positions, a floor trader said.

 

On daily open auction technical charts, May corn settled below its 10-day moving average for the first time since Feb. 13.

 

In options trading, MF Global bought 3,000 May US$5.00 puts and FC Stonnee sold 1,500 December US$4.50 puts.

 

Price direction Monday will be determined by weekend news and what happens Sunday night, the floor trader said.

 

Oat futures settled 20 cents lower, or limit down, pushed lower by the declines across the rest of the grain complex, an analyst says. Fund selling also added to the declines, he said. May oats dropped 20 cents to US$3.99 1/4 per bushel, the first time it settled under US$4 since February 22.

 

Ethanol futures ended slightly lower. April ethanol slipped .005 cent to US$2.350 per gallon and May ended down 002 cent to US$2.328.