May 5, 2006

 

CBOT Corn Review on Thursday: Lower on technical liquidation

 

 

Corn futures at the Chicago Board of Trade finished lower Thursday as technically based fund liquidation weighed on the market, sources said.

 

July fell 3 1/4 cents to US$2.39 1/4 per bushel and December settled 3 1/2 cents lower to US$2.62 1/2.

 

The market experienced technical liquidation as the funds are record-long and trimming some of their positions, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

The market fell below US$2.39, filling the upside gap created in late March. However, there were not any sell stops below that level and the market stabilized, a commercial analyst said. In addition, there was some scale-down buying, limiting the declines, he added.

 

Favorable planting weather forecasts for the next several days added to the bearish tonnee, a floor trader said. The weather looks extremely favorable to corn planting for the next several days.

 

Mostly dry weather is forecast through Sunday in the western U.S. Midwest with only a few light showers in the far-southern areas of the region early in the period, DTN Meteorologix Weather said. Temperatures are forecast to average below to much below normal early in the period, DTN Meteorlogix said.

 

Dry weather is also forecast through the weekend in the eastern U.S. Midwest, with the exception of a chance for showers near the Ohio River Thursday and Friday, DTN Meteorologix Weather said. Temperatures are forecast below to well below normal Friday and Saturday, DTN Meteorologix Weather added.

 

Weekly corn export sales were higher than expectations at 1.282 million metric tonnes but had little impact, floor sources said. Analysts had expected corn sales between 550,000-1.0 million tonnes.

 

On daily technical charts, July filled to the downside an upside price gap created at the end of March and traded at its lowest level since March 30.

 

Buyers Thursday included Merrill Lynch, which bought 2,000 July. ABN Amro bought 1,000 July, Rand bought 1,000 July, ADM bought 300 May, Fimat bought 500 July, Iowa Grain bought 500 July, RJ O'Brien bought 500 July, and Tenco bought 500 July.

 

Sellers Thursday included Citigroup, which sold 2,000 July. JP Morgan sold 1,000 December and 1,500 July, Man Financial sold 1,700 July, Rand Financial sold 1,500 July, O'Connor sold 1,000 July, Fimat sold 1,400 July and FC Stonnee sold 500 December.

 

Net commodity fund selling was estimated at 4,000 contracts.

 

Oat futures settled lower but above earlier levels as light buying interest trimmed earlier losses, sources said. The July contract fell 1/4 cent to US$1.89 1/2 per bushel.

 

Ethanol futures finished mostly lower on the weakness in other energy markets, an ethanol trader said. The spot month May contract fell 4 cents to US$2.71 per gallon. The June contract settled 2 cents lower to US$2.67.