March 15, 2008

 

CBOT Corn Review on Friday: Settles lower on equity losses, liquidation

 

 

Chicago Board of Trade corn futures ended lower Friday, under pressure from spillover weakness from equity and financial markets as well as liquidation ahead of the weekend, thought to be profit-taking.

 

May corn fell 10 1/4 cents to US$5.59 1/4, July also declined 10 1/4 cents to US$5.71 1/4, and December settled 8 1/4 cents lower at US$5.75.

 

The market was waiting on the Informa acreage estimates, and when they came in near expectations, corn turned its attention toward the negative sentiment in the financial markets, said Bill Nelson, associate vice president at Wachovia Securities.

 

Private analytical firm Informa Economics estimated 2008 U.S. planted corn acreage at 87.5 million acres, below the 93.6 million planted in 2007 as well as the 90.0 million estimated by the U.S. Department of Agriculture at its Outlook Forum in February.
 

The move out of equities produced a flight-to-quality scenario, and with corn prices at record levels, it encouraged participants to trim positions ahead of the weekend, Nelson said.

 

The declines in the other grain contracts added to the weakness, with May corn touching limit down, or 20 cents lower, briefly, a trader said. May wheat fell 52 1/2 cents to US$11.91 1/2 per bushel, and May soybeans settled limit down, 50 cents lower at US$13.52 3/4.

 

Near the close, a late round of short covering helped slice the declines in corn.

 

Despite the price weakness, corn will be less impacted by the outside markets, compared to other commodities, focusing on the fundamentals until the USDA releases its acreage-intentions report, a commission house analyst said.

 

The USDA is scheduled to release the report Monday, March 31, at 8:30 a.m. EDT.

 

Price direction Monday will be determined by financial news over the weekend and what occurs in overseas markets, a trader said.

 

In open-auction trades, commodity fund selling was estimated at 6,000 contracts.

 

On daily open-auction technical charts, May corn traded below its 20-day moving average but settled above it.

 

In options trading, Newedge sold 2,000 May US$5.50 calls and sold 2,000 July US$6.00 calls.

 

Oat futures ended sharply lower, dragged down by spillover selling from the rest of the commodity markets, with speculative liquidation pressure adding to the weakness, an analyst said.

 

May oats settled 8 1/2 cents lower at US$3.92 1/2 per bushel.

 

Ethanol futures settled lower. April ethanol slipped 1.7 cents to US$2.471 per gallon and May fell .005 cent to US$2.435.