April 8, 2008

 

CBOT Corn Review on Monday: Down on profit-taking, seasonals, spillover

 

 

U.S. corn futures fell on pressure from sharply lower wheat futures and soybean weakness, with profit-taking and seasonal factors also putting the market on the defensive, analysts said Monday.

 

Pit-traded May corn on the Chicago Board of Trade fell 8 cents to settle at US$5.90, and new-crop December lost 5 1/4 cents to US$6.03 1/2 a bushel.

 

One analyst says a strong seasonal tendency to sell corn at this time may have influenced bearish traders.

 

"The wheat market drove us lower, but we're in a really strong seasonal pattern right now to turn lower in corn from now until April 25," said Brian Hoops, president of Midwest Market Solutions.

 

Traders are fully aware of this seasonal trend, which accounts for at least some of the price pressure, he said.

 

In addition, the market is anticipating corn planting getting under way, and hedging pressure is being uncovered, Hoops explained.

 

The markets were mostly higher in early trade, and new-crop December even set a new all-time high of US$6.13 a bushel before the selling pressure developed. The profit-taking snowballed as the session progressed and wheat's losses spilled into the other pits.

 

The grain pits ignored sharp speculative gains made in the key inflationary markets of crude oil and precious metals, which can often be supportive as fund activity often carries strong momentum.

 

Traders remain concerned over planting delays as storm fronts pass through the Midwest this week, keeping southern and eastern sections of the corn belt wet. While conditions may turn drier next week, 11- to 15-day forecasts call for a return to wet weather, Cropcast said, further hampering planting efforts.

 

In other news, corn export inspections for the week to April 3 were higher at 48.532 million bushels, up from 42.993 million last week, the U.S. Agriculture Department said.

 

Traders are anticipating Wednesday's 8:30 a.m. EDT release of the USDA's April supply/demand report, in which the agency is expected to tighten 2007-08 ending stocks. On average, stocks are expected to shrink to 1.303 billion bushels, from 1.438 billion in the March report, according to a Dow Jones Newswires survey. The range of estimates from 15 analysts went from 1.138 billion to 1.427 billion bushels.

 

Last week, USDA data showed that quarterly stocks as of March 1 had tightened to 6.86 billion bushels, suggesting the livestock and ethanol sectors were using the grain at a stronger-than-expected pace. This has many analysts adjusting feed and residual usage levels higher.

 

In other markets, CBOT oat futures closed lower on profit-taking and spillover pressure from the neighboring corn market, a floor trader said. May oats tumbled 19 cents to US$3.66 1/2 per bushel.

 

Ethanol futures also closed weaker. May ethanol slid US$0.001 to US$2.515 per gallon.