March 14, 2007

 

CBOT Corn Review on Tuesday: Lower on fund liquidation, technicals

 

 

Chicago Board of Trade corn futures ended lower Tuesday but well off lows set earlier in the session as late position squaring helped prices recover from active fund and technical selling, a floor analyst said.

 

May corn declined 2 1/2 cents to US$4.06 3/4 per bushel, July slipped 2 cents to US$4.17 3/4, and December also fell 2 cents to US$4.00 3/4.

 

Technical and fund liquidation pushed prices lower earlier in the session with prices trading down to their lowest levels in over a month, the analyst said.

 

Commodity fund selling was estimated at 12,000 contracts.

 

May corn was able to hold around the US$4.03 level on daily technical charts, and that encouraged some buying interest to come back into the market, trimming the losses, the analyst added.

 

People are skittish about the potential for large corn acres this spring and there is a private analytical firm estimate due Friday, so some weak long position holders sold, a commission house broker said.

 

The market has been in a holding pattern for the last month and corn has been saturated with long positions with very little justification for those positions at these higher price levels, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

Recent selling interest in corn might be tapped out and the market could see some support Wednesday ahead of Friday's private analyst acreage estimate, a commercial-connected analyst said.

 

However, the outside markets were weaker Tuesday and it depends on what the outside markets do overnight and in Wednesday's trade, he added.

 

On day session open auction technical charts, May corn traded down to its lowest level since mid-January, partially filling to the downside an upside price gap created in January and ending below most major moving averages.

 

Buyers on Tuesday included JP Morgan, which bought 3,000 December and 500 May, and Penson GHCO bought 500 May. ADM sold 2,000 July and 1,500 December, and Rand sold 1,500 December.

 

In options trading, Man Financial bought 1,500 July US$4.20 calls and sold 1,500 July US$5.00 calls.

 

Oat futures settled higher as light speculative fund buying underpinned prices, a floor analyst said. The weakness in corn and wheat had little impact on oats with the funds providing support, the trader added.

 

May oats settled 1 1/4 cents higher at US$2.63 3/4 per bushel and July gained 2 3/4 cents to US$2.69.

 

Ethanol futures ended higher in thin trade. The April contract rose 5 cents to US$2.38 per gallon. The May contract ended up 1.5 cents at US$2.22 per gallon.