April 4, 2007

 

CBOT Corn Review on Tuesday: Settles lower, old crop leads declines

 

 

Chicago Board of Trade corn futures ended lower Tuesday, unable to sustain light advances set in early trading as renewed speculative liquidation pressured the nearby months, a floor analyst said.

 

May corn fell 8 1/2 cents lower to US$3.46 1/4 per bushel, July declined 8 1/4 cents to US$3.58 1/4 and December slipped 2 cents to US$3.67 1/2.

 

The funds appeared to be selling the nearby contracts short, the analyst added. New crop contracts ended mixed as weather related concerns helped keep those months supported.

 

The weather is potentially bullish, a floor trader said. It has been excessively wet in parts of the U.S. Midwest and the forecasts call for colder than normal weather over the near term, which could delay corn planting. If this occurs, the potential is for fewer corn acres than expected, the trader added.

 

Speculative fund liquidation and margin call selling continued to depress the nearby contracts, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

The market perceives that old crop supplies are adequate with ideas that old crop ending stocks could be increased in next week's U.S. Department of Agriculture supply and demand reports, Roose said.

 

New crop months were relatively well supported by ideas that the weather could impede planting progress and the need to continue to encourage expanded corn acreage given the demand from the ethanol industry he said.

 

Corn has been down hard for the past three days and could see some evening up on Wednesday, he said.

 

May corn settled Tuesday over 50 cents lower from its high on Thursday.

 

On daily technical charts, May traded an outside day, above and below the high and low set in Monday's activity, but settled above its 200-day moving average. May's 9-day relative strength index is 16.54.

 

Commodity fund selling was estimated at 10,000 contracts.

 

Buyers Tuesday included Calyon, which bought 1,000 December, Fimat which bought 1,000 December and Rosenthal, which bought 500 December and 500 March 2008.

 

Citigroup sold 3,000 December, JP Morgan sold 700 July and Rosenthal sold 600 July.

 

In options trading, Iowa Grain sold 2,000 July US$5.00 calls and FC Stonnee sold 3,000 May US$3.80 puts, 1,000 December US$4.00 puts and bought 1,000 July US$3.60 puts.

 

Oat futures settled with modest losses as light fund selling in the nearby months kept prices on the defensive, a commission house analyst said.

 

May oats settled 3 1/2 cents lower at US$2.73 per bushel and July fell 2 cents to US$2.79 3/4.

 

Ethanol futures ended lower in quiet activity. The April contract settled 5.5 cents lower at US$2.14 per gallon. May ethanol settled down 6 cents at US$2.09.