March 14, 2006

 

CBOT Corn Review on Monday: Down on recharged soils, wheat price drop

 

 

Corn futures on the Chicago Board of Trade ended lower Monday, starting the week on the defensive, as speculative sales, weakness in wheat and improved pre-planting soil conditions weighed on prices.

 

CBOT March corn settled 5 1/2 cents lower at US$2.20 1/2, and May corn ended 5 3/4 cents lower at US$2.28 3/4.

 

The market postured lower from the outset, as the absence of supportive features in the face of beneficial rains in the Midwest, technical weakness, bird flu worries and the psychological impact of stumbling wheat futures pinned prices in negative territory, analysts said.

 

The theme was consistent throughout, with futures testing the lower end of the market's recent price range. The market lacked supportive factors to extend Friday's gains, with the exhaustion of buying and technical weakness leaving futures targeting downside technical objectives.

 

The ability of May futures to extend below their 50-day moving average accelerated selling, but futures continued range-bound activity, with technical support in the US$2.27 1/2-per-bushel level remaining an underpinning feature.

 

Solid export demand remains a supportive attribute for futures, as analysts say bird-flu and mad-cow worries have failed to temper corn export demand.

 

Otherwise, futures had little fundamental influences. Traders turned their attention to planting conditions with bearish supply-side fundamentals factored into the market.

 

The DTN Meteorlogix forecast said rains of up to one-half inch are in store for the latter half of the week in the Midwest. Soil moisture levels are even reaching surplus categories in the Ohio Valley, with flood bulletins posted in Indiana, Kentucky, Ohio, and southeastern Illinois. Thunderstorms in the southern and eastern Midwest brought severe weather damage, but also some widespread rainfall during the past weekend. Rainfall of up to two inches was reported, with locally heavier readings, and covered an area from central Missouri through the lower Ohio Valley, Meteorlogix added.

 

The U.S. Department of Agriculture said corn inspected for export in the week ended March 9 totaled 36.422 million bushels. The export figure was down 5.4% from last week's 38.509 million. Analysts expected corn inspections in a range of 32 million to 35 million bushels. Accumulated corn export inspections for the 2005-06 marketing year total 962.937 million bushels, up 5.7% from last year's 910.975 million at the same time.

 

In pit trades, Cargill bought 1,000 May; Fimat bought 400 March and 300 May; Man Financial bought 400 March; and FCStonnee bought 300 March.

 

On the sell side, Fimat sold 500 May; Man Financial sold 500 July; Refco sold 1,000 May; and Tenco sold 700 May and 300 December. Commodity fund selling was estimated near 3,000 lots.

 

Ethanol futures ended lower Monday. The April ethanol contract settled 2 cents lower at US$2.35 and May futures ended 1/2 cent lower at US$2.30 per gallon. Oat futures were modestly lower. CBOT March oat futures settled 1/2 cent lower at US$1.81 1/2 and May oats ended 3/4 cent lower at US$1.84 1/2 per bushel.