March 29, 2007

 

CBOT Corn Review on Wednesday: Finishes lower on speculative liquidation

 

 

Chicago Board of Trade corn futures ended lower Wednesday on continued speculative liquidation based on a weak technicals, a floor analyst said.

 

May corn declined 4 cents to US$3.88 1/2 per bushel, July fell 3 1/2 cents to US$4.00 1/4, and Dec slipped 3/4 cent to US$4.00 3/4.

 

Corn has been stuck in a down-trending type trade, said Ross Carstens, a broker with Commodity Services in Iowa.

 

It remains under most of its major moving averages and as a result, corn saw some additional liquidation, Carstens said.

 

In the last two months May corn has come under pressure, losing over 50 cents per bushel and the sell-off was just a continuation of the trend amid fears that the upcoming planting intentions report will show a sharp increase in corn acres, he said.

 

U.S. corn planted acreage for the 2007-08 marketing year is estimated at 88.061 million acres, according to a survey of 22 analysts conducted by Dow Jones Newswires. This is 9.7 million acres higher than the 78.3 million planted last year and above the 87.0 million acres estimated by the U.S. Department of Agriculture at its Outlook Forum earlier in March.

 

U.S. quarterly corn stocks were estimated at 6.023 billion bushels as of March 1, 2007, according to a survey of 15 analysts conducted by Dow Jones. Stocks as of Mar. 1 2006 were estimated at 6.987 billion bushels by the USDA.

 

The USDA is scheduled to release the planted acreage and quarterly stocks report on Friday at 8:30 a.m. EDT (12:30 GMT).

 

The market expects corn acres to be a lot higher this year and soybean acres lower, and on Wednesday there was some liquidation of corn positions by speculators and establishing long positions in soybeans, a commission house analyst said.

 

Commodity fund selling was estimated at 10,000 contracts.

 

Given the recent losses corn has experienced, it could expect to see some position squaring ahead of the report on Thursday, a floor trader said.

 

On daily technical charts, May remained below its 100-day moving average but traded an outside day, with the high and the low greater than the range established in Tuesday's trade.

 

Buyers on Wednesday included ADM, which bought 600 December and ABN Amro, which bought 700 July.

 

Fortis sold 1,500 December and 200 July and Man Financial sold 800 May and 500 July.

 

In options trading, JP Morgan sold 1,000 May US$3.70 puts and Fortis sold 1,000 May US$3.70 puts while Man Financial sold 900 May US$3.90 calls and bought 900 May US$3.90 puts.

 

Oat futures ended mixed in quiet trading as light bear market spreading weighed on the nearby and supported the deferred months, an oat analyst said. The funds weren't particularly active compared to recent sessions, he added.

 

May oats fell 1 1/4 cents to US$2.88 1/4 per bushel and July settled 1 1/2 cents lower to US$2.91.

 

Ethanol futures finished lower in light trade. The April contract settled 4.5 cents lower at US$2.255 per gallon. The May contract fell 4.4 cents to US$2.146.

 

On Thursday, the USDA is scheduled to release the weekly export sales report for the week ended March 22. Analysts expect sales between 650,000 and 1.0 million metric tonnes.