March 24, 2006

 

CBOT Corn Review on Thursday: Grinds lower; lacked supportive features

 

 

Chicago Board of Trade corn futures ended lower Thursday, grinding out moderate declines, as the market takes on a defensive theme in the absence of supportive features to underpin prices.

 

CBOT May corn settled 3 1/4 cents lower at US$2.19 1/4, July corn ended 3 1/4 cents lower at US$2.30 1/4 and December corn finished 2 1/2 cents lower at US$2.51 1/4.

 

The market backpedaled from the week's earlier highs, carving out losses amid the bearish influences of ample supplies, favorable pre-planting soil moisture and lingering worries over the spread of bird flu globally, analysts said.

 

The theme was consistent from the outset, gradually working its way down during the day, with supply side fundamentals attracting sellers, while the uncertainty of future fund buying interest discouraged aggressive selling interest, traders said.

 

Corn futures still have a lot of speculative longs in the market, so traders remain a bit hesitant to get caught short if fund buying resurfaces. However, traders did manage to beat up on old crop contracts heading into next week's quarterly stocks report that is expected to reveal ample U.S. corn supplies again, said Mike Zuzolo, chief analyst with Risk Management Commodities Inc. in Lafayette Ind.

 

Rumors of bird flu being detected in Mexico applied early pressure to add to the weak tonnee, before it was confirmed that the rumor was false. Otherwise, the market had little directive forces to focus on, with the lower grind anticipated to continue unless commodity fund buying emerges to support upward momentum, analysts add.

 

Mexico's Agriculture Ministry denied rumors that a case of high-pathogenic avian flu had been found in a town on the U.S. border. Jose Angel del Valle, head of animal health at the Agriculture Ministry, said in a telephone interview Thursday, Mexico is totally free of bird flu.

 

The U.S. Department of Agriculture said 2005-06 corn weekly export sales totaled 911,300 metric tonnes, 12% under the previous week and 19% below the prior four-week average. 2006/07 marketing year sales totaled 37,000 tonnes. Trader expectations ranged from 1,000,000 to 1,200,000 tonnes.

 

In pit trades, ABN Amro bought 800 May, Fimat bought 600 July, Rosenthal bought 400 May, Tenco bought 300 May, and Stern bought 500 May.

 

On the sell side, ABN Amro sold 400 May and 300 December, Citigroup sold 300 July, Goldenberg Hehmeyer sold 500 May, JP Morgan sold 500 May and 600 July, UBS Securities sold 2,500 May.

 

Commodity funds were net sellers on the day.

 

Ethanol futures ended finished higher in light trade. The April ethanol contract settled 3 cents higher at US$2.46 and June futures ended 5 cents higher at US$2.45 per gallon.

 

Oat futures finished lower, in step with the defensive theme of other grain futures. CBOT May oat futures settled 1 1/2 cent lower at US$1.72 1/4 and July oats ended 1 3/4 cent lower at US$1.75 per bushel.