April 3, 2007

 

CBOT Corn Review on Monday: Ends sharply lower but above limit down

 

 

Chicago Board of Trade corn futures settled sharply lower Monday but up from the limit-down levels posted in the first five contract months earlier in the session.

 

May corn settled 19 3/4 cents lower at US$3.54 3/4 per bushel, July fell 19 cents to US$3.66 1/2 and December declined 14 cents to US$3.69 1/2.

 

Follow-through selling from the overnight session and Friday's bearish acreage intentions report from the U.S. Department of Agriculture pushed prices to trade at their limit down, or 20 cents lower, level in early trade.

 

Selling eased after mid session, when soybean futures and soybean meal rallied. May soybeans gained 17 3/4 cents to US$7.79 per bushel and May soybean meal jumped US$6.50 per short tonne to US$218.30.

 

"The panic money liquidation ran its course," and once that was complete, corn traded above limit down, said John Kleist, senior analyst at Top Third Ag Marketing.

 

The rally in soybean prices was a big help in moving corn off limit down but the price activity in December corn was also a big factor, Kleist said. The funds liquidated their old-crop positions but did not liquidate their new- crop contracts. That helped lessen some of the selling, he said.

 

In addition, the corn crop is not in the ground and in many areas farmers can't get into their fields to prepare the ground for planting, and given the fact that farmers are expected to plant 90 million acres this year, "time is of the essence to get all 90 million planted," Kleist said.

 

The USDA released the weekly export inspections report near mid session, and a floor analyst termed inspections "soft."

 

The USDA reported corn inspected for export totaled 32.557 million bushels for the week ended March 29, below the 39 million to 44 million expected by analysts as well as the 44.710 million inspected the previous week.

 

On daily technical charts, May gapped open but remained above its 200-day moving average. May's 9-day Relative Strength Index is 18.71.

 

Commodity fund selling was estimated at 20,000 contracts.

 

Options trading was active but not as heavy as Friday's trade, an options analyst said. JP Morgan supplied support to the corn futures, purchasing synthetic futures around 4 cents in the May options, the analyst added.

 

An options broker estimated corn options trading at 75,000 contracts.

 

Oat futures settled unchanged, recovering from sharp, losses set early in the session on fund selling and spillover weakness, a commission house analyst said. However small-scale buying interest and a recovery in corn values helped slice losses, the analyst added.

 

May oats settled unchanged at US$2.76 1/2 per bushel and July also ended unchanged, at US$2.81 3/4.

 

Ethanol futures ended mixed in thin trade. The April contract did not trade and settled 2.9 cents lower at 2.166. May ethanol settled unchanged at US$2.15.