March 21, 2008

 

CBOT Corn Review on Thursday: Down; succumbs to speculative liquidation again

 

 

Chicago Board of Trade corn futures ended sharply lower Thursday, succumbing to pressure from speculative long liquidation and spillover weakness from neighboring soybean futures, analysts said.

 

May corn settled 19 3/4 cents lower at US$5.07 1/4, July corn ended 20 cents lower at US$5.19 1/4, and December finished 20 cents lower at US$5.21 1/4.

 

The liquidation of market length by speculative funds continued to be a featured attraction, as broad based selling in an effort to reduce risk in the marketplace kept sellers in control of direction, analysts said.

 

The market flirted with limit down levels throughout the day, but traders said bullish underlying fundamentals associated with acreage uncertainties provided underlying support, as did concerns linked to flooding in the southern Midwest that may lead to planting delays, analysts added.

 

The broad sell-off in commodities continued to be a key driver of prices, but corn's ability to hold just above limit levels is providing optimism that downside movement is starting to run its course, with bullish fundamentals the back-drop to limit further losses, traders said.

 

Nevertheless, speculative positions remain large in the market. With many funds liquidating positions into cash or other investments amid the risk associated with historic prices, traders are leery of further liquidation, a CBOT floor broker said.

 

Meanwhile, the DTN Meteorlogix forecast said the first weekend of spring will be a drier weekend for the southern and eastern Midwest, which received very heavy, flooding rains during the first half of this week.

 

However, rivers and streams in flood stage will take a number of days to return to their normal levels, and saturated soils mean that any thoughts of field work for corn planting will be shelved until most likely the end of March.

 

All stations in the Ohio Valley - Paducah, Evansville, Louisville, Cincinnati - recorded at least two inches of rain Wednesday.

 

In pit trades, Fortis bought 2,000 July, Citigroup bought 600 May, and JP Morgan bought 300 May and 300 December contracts. Iowa Grain sold 1,300 July, MF Global sold 500 December, and RJ O'Brien sold 600 July contracts. Speculative fund selling was estimated near 9,000 lots.

 

CBOT oat futures closed sharply lower amid broad liquidation in commodities, traders said. There was spillover pressure from sharp downside moves in neighboring grain markets, traders added. May oats closed down 19 cents at US$3.39 per bushel.

 

Ethanol futures ended mixed. April ethanol closed up 1.5 cents at US$2.360 per gallon, while May ethanol closed down 0.004 cents at US$2.316.