April 13, 2007

 

CBOT Corn Review on Thursday: Lower on speculative sales, weather forecasts

 

 

Chicago Board of Trade corn futures ended lower Thursday, but managed to trim earlier declines on light position squaring after aggressive speculative selling was exhausted.

 

May corn settled 2 cents lower at US$3.58 3/4, July corn ended 1 1/4 cents lower at US$3.71 1/2, and December finished 1/2 cent lower at US$3.87 1/4.

 

The combination of improved planting prospects amid warmer and drier weather forecasts for the Midwest late next week kick-started the declines, with speculative fund liquidation coming on board to pin prices in negative territory, analysts said.

 

The defensive theme was consistent, with prices sliding to over one-week lows. However, the market managed to trim its losses down the stretch amid exhausted selling pressure and underlying end-user buying, analysts added.

 

The declines were seen as technical in nature, with fund liquidation a featured attraction, analysts said. "I don't see the fundamental reasoning behind the sharp early declines, leaving me to see this as more investor-type liquidation," said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Traders said the market was seemingly overlooking potential planting delays, with wet conditions seen returning after a brief return to warmer and drier weather in the Midwest next week. A strong weekly export sales figure provided mild support, but failed to offset the speculative sales that filtered through the market at midday, traders added.

 

Otherwise, the rolling of May positions to deferred contracts was a featured attraction, traders said.

 

The U.S. Department of Agriculture reported weekly corn export sales were 1,507,000 metric tonnes for the week ended April 5. Included in the total were sales of 181,400 metric tonnes for the 2007-08 marketing year. Analysts had forecast sales between 600,000 and 850,000 metric tonnes.

 

In pit trades, ADM Investor Services bought 300 May, FCStonnee bought 300 July, JP Morgan bought 500 May, Fimat bought 400 July and Man Financial bought 500 July. JP Morgan sold 300 July and 1,000 December, Fortis and RJ O'Brien each sold 500 July, Penson GHC sold 500 May, 300 July, and 500 December, and Rand Financial sold 500 December. Speculative fund selling was estimated at 6,000 contracts.

 

In options, Man Financial sold 2,000 December US$4.50 calls, bought 2,000 December US$3.70 puts and sold 2,000 December US$3.20 puts. Rand Financial bought 2,000 May US$3.90 calls, and JP Morgan sold 1,500 December US$4.00 calls.

 

CBOT oat futures closed lower under pressure from fund and commission house selling of nearby months, traders said. Commission houses and funds bought the December contract, traders added. May oats closed 8 cents lower at US$2.69 1/2 per bushel, while July oats closed 8 1/4 cents lower at US$2.76.

 

CBOT ethanol futures extended gains Thursday. May ethanol closed up US$0.043 at US$2.280 per gallon, and June ended up US$0.050 at US$2.210.