March 10, 2007

 

CBOT Corn Review on Friday: Lower on speculative sales, lacked fresh support

 

 

Chicago Board of Trade corn futures ended lower Friday, pressured by speculative selling amid the absence of fresh supportive news to underpin prices, analysts said.

 

March corn ended 3 3/4 cents lower at US$4.08 1/4 per bushel, May corn settled 4 cents lower at US$4.17 1/2, and December finished 3 cents lower at US$4.07 3/4.

 

The market didn't have any bullish stimulation to attract buyers from either the U.S. Department of Agriculture's supply and demand report or outside markets, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

The USDA's report contained nothing that was market moving, opening the door for speculative funds to continue there liquidation activities in old crop contracts, Kleist added.

 

Meanwhile, technically inspired selling was featured, with declines accelerating once support at Thursday's lows was penetrated. However, analysts said speculative buyers did provide a bullish defense above major moving average support, reflecting a long range bullish fundamental outlook, analysts said.

 

Overall volume was relatively subdued, as the news void had traders taking a cautious approach, particularly with the next fundamental event not expected until spring plantings emerge, analysts added. This was consistent with weakness in crude oil and metals aiding the defensive tonnee.

 

The USDA estimated U.S. corn ending stocks at 752 million bushels, unchanged from the February estimate and modestly below the average analyst estimate of 763 million bushels.

 

On the world scene global corn stocks were cut to 87.79 million metric tonnes, down from 87.95 million in February. USDA raised Argentine corn production by 500,000 metric tonnes to 21.5 million, and raised Brazil's production 2 million tonnes to 48 million.

 

South Africa's corn crop was trimmed 2.5 million metric tonnes to 7 million, as drought and heat during February sharply reduced production prospects, USDA said.

 

In pit trades, JP Morgan bought 300 May and 1,000 July. JP Morgan sold 1,000 December, Rand Financial sold 800 May and 800 July, UBS Securities sold 600 May, Citigroup and Man Financial each sold 500 May, and Fimat sold 400 May. Speculative fund selling was estimated at 4,000 lots.

 

CBOT oat futures ended mixed, with nearby and deferred month contracts diverging over price direction. The unwinding of new crop/old crop spreads were featured attraction, with funds liquidating length in new crop contracts, analysts said. May oats closed 1-cent higher at US$2.63 per bushel and December ended 2 3/4 cents lower at US$2.45 1/4.

 

Ethanol futures ended lower, with the April contract settling 0.090 lower at US$2.280, and the May contract settling 0.070 lower at US$2.170.