May 4, 2006

 

CBOT Corn Review on Wednesday: Lower on fund sales, technical weakness

 

 

Corn futures settled lower Wednesday as early fund selling led to technical liquidation, keeping prices on the defensive for much of the session before position squaring near the close trimmed the losses, floor sources said.

 

July slipped 1 cent to US$2.42 1/2 per bushel and December declined 1 cent to US$2.66.

 

Corn opened slightly higher on a firm tonnee in overnight trade and early strength in precious metals, a floor trader said. However, fund selling concentrated in the December future helped push corn into negative territory as did a steep sell off in metals futures soon after the opening, he added.

 

Commodity fund selling was estimated at 7,000 contracts.

 

The selling kicked off light technical sell stops in July, traders noted, with that contract falling below its 50-day moving average and slipping to its lowest levels in almost a week.

 

Large deliveries posted against the May future added to the weak tonnee, a commercial analyst noted, as the lack of strong stoppers will likely lead to re-circulating deliveries, he said. The larger deliveries as May approaches expiration is not positive, he added.

 

Forecasts for drier weather in parts of the U.S. Midwest over the next several days were also viewed negatively, as producers will continue to plant corn, a floor analyst said.

 

Mainly dry weather is forecast in the western U.S. Midwest on Thursday and Friday with only a chance for a few showers on Saturday and Sunday, DTN Meteorologix Weather said.

 

After scattered thunderstorms move through the eastern U.S. bringing .25 -1.00 inch and locally heavier amounts, mainly dry weather is forecast for Saturday and Sunday, DTN Meteorologix Weather said.

 

Buyers Wednesday included ABN Amro, which bought 1,000 July, Rand bought 300 July, Man Financial bought 200 May, and Fimat bought 200 July and 100 May.

 

Sellers Wednesday included ABN Amro, which sold 2,000 December and 500 July, Fimat sold 700 July, Man Financial sold 600 July and 500 December, JP Morgan sold 600 July, O'Connor sold 1,000 July, rand sold 500 July, and the Refco division of Man Financial sold 500 July.

 

Oat futures finished higher, supported by light fund buying after Tuesday's declines, a floor trader said. The July contract settled 1 1/4 cents higher at US$1.89 3/4 per bushel.

 

Ethanol futures finished mostly lower. The spot month May contract fell 4 cents to US$2.75 per gallon. The June contract ended 1/2 cent lower to US$2.69.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales for the week ended Apr. 27. Corn export sales are expected between 550,000 and 1 million metric tonnes.