March 15, 2007

 

CBOT Corn Review on Wednesday: Finishes lower on fund selling

 

 

Chicago Board of Trade corn futures settled mostly lower Wednesday ,but staged a recovery from levels reached earlier on late short covering, analysts said.

 

Earlier in the session, May corn traded down to its lowest levels since January on speculative fund selling, the analysts added.

 

May corn fell 2 cents to US$4.04 3/4 per bushel, July ended 2 1/2 cents lower at US$4.15 1/4, and December gained 1 cent to US$4.01 3/4.

 

The fund selling pushed the market lower, with technical selling also adding to the weakness, said Vic Lespinasse of AG Edwards & Sons.

 

Speculative fund selling was estimated at 15,000 contracts.

 

During the session, May fell below the US$4.00 level, which was psychologically negative, adding to the technical weakness, a commercial trader said.

 

Outside market weakness also added to the downward pressure to corn, Lespinasse said. When the Dow fell over 100 points during the session, corn declined with it. However, when the Dow rallied to trade higher, it spilled over into the grains, encouraging short covering and reversing most of the losses, he said.

 

Recently the equities markets have been influencing grain price direction, and when the Dow moves, so do the grains, a floor trader said.

 

The absence of fresh fundamental news left the market trading the technicals, and when the funds sold, there was not much to support the market until the short covering, the commercial trader added.

 

December corn fell as low as US$3.93 during the session, its lowest level since early February.

 

Corn has been extremely choppy, but price direction in the near term depends on what the funds want to do in the absence of fundamental news, the floor trader said.

 

Buyers on Wednesday included JP Morgan, which bought 700 May and 500 December, and ABN Amro, which bought 1,200 July.

 

Fimat sold 1,000 December and ADM sold 1,200 December.

 

In options trading, Penson GHCO bought 2,600 December US$4.00 calls and 2,600 December US$5.00 calls and sold 2,600 December US$3.60 puts.

 

Oat futures ended mixed, with the May contract slightly higher on light fund buying, a floor trader said. Oats continue to be supported by light fund buying, with the market ignoring the volatility in the other grains, the trader added.

 

May oats ended 3/4 cent higher at US$2.64 1/2 per bushel and July fell 1 3/4 cents to US$2.67 1/4.

 

Ethanol futures finished mixed in quiet activity. The April contract fell 1 cent to US$2.37 per gallon. The May contract ended up .005 cent at US$2.225 per gallon.

 

Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report at 8:30 a.m. EDT (1230 GMT). Analysts expect sales to be 800,000-1.1 million metric tonnes for the week ended March 8.