May 20, 2006

 

CBOT Corn Review on Friday: Falls on speculators sales, outside influences

 

 

Chicago Board of Trade corn futures stumbled lower Friday, succumbing to speculative and technical selling, as the bearish influences of outside markets sent buyers running for cover.

 

CBOT July corn ended 7 1/2 cents lower at US$2.52 3/4 and December corn 8 cents lower at US$2.77 1/4.

 

Corn's declines were triggered by the plunge in outside inflationary markets, with the weight of the heavy buildup of speculative longs leaving the market overdue for a consolidative blow off, said John Kleist of Kleist Agricultural Consulting.

 

The bearish influences of a higher U.S. dollar, lower crude oil and sharply lower precious metal markets initiated fund and speculative selling, and with favorable growing conditions expected next week, the market had little supportive features to feed off, traders added.

 

Futures fell to a one-week low, as heavy speculative and fund pressure induced the losses, with old-crop contracts overpriced in relation to ample nearby supplies, said Kleist. The market is poised for further consolidation, with technical traders targeting the chart gap left from last week if weather conditions cooperate and outside markets continue their retreat, he added.

 

The DTN Meteorlogix weather outlook said precipitation maps show light rainfall in the northern and eastern Midwest over the next few days. Conditions for planting and development are good in the western corn belt, with scattered rain up to half an inch. In the eastern Midwest, rain will also be scattered, with totals up to a quarter inch.

 

Temperatures in the east will be below normal, with highs in the 60s and 70s and down into the 50s around the Great Lakes. But by the middle of next week, temperatures should be up above normal, so plant development should not be adversely affected, Meteorlogix said.

 

In pit trades, Calyon Financial bought 2,500 July and ABN Amro bought 500 July.

 

On the sell side, Citigroup sold 1,000 July and 2,000 December, Fimat sold 1,500 July, Goldenberg Hehmeyer sold 5,000 December, JP Morgan sold 8,000 December, Prudential Financial sold 2,000 December, and Rand Financial sold 1,000 July and 1,000 December. Commodity fund selling was estimated near 23,000 contracts.

 

Ethanol futures moved higher Friday. The June ethanol contract settled at US$3.14 and July futures ended at US$3.05 1/2 per gallon.

 

Oat futures ended lower across the board Friday, setting back in step with the rest of the grain complex. Broad based commodity weakness and a lack of supportive features to support prices above US$2.00 per bushel, opening the door the price declines, traders said. July oat futures settled 3 1/2 cents lower at US$1.98 1/4 and December oats ended 3/4-cent lower at US$1.92 3/4 per bushel.