May 11, 2007

 

CBOT Corn Review on Thursday: Down on technical, speculative selling before report

 

 

Chicago Board of Trade corn futures ended at lower levels Thursday and near the lows of the session, dragged down by technical weakness and long liquidation ahead of Friday's supply and demand reports, traders said.

 

May corn dropped 11 1/2 cents to US$3.45 3/4 per bushel, July fell 11 3/4 cents US$3.54 1/2, and December declined 9 1/2 cents to US$3.56 1/2.

 

"From a technical standpoint corn is back at the bottom of its recent range," said Don Roose, president of US Commodities in West Des Moines, Iowa. "A lot of risk premium has exited the market ahead of what is expected to be a bearish stocks report on corn in Friday's U.S. Department of Agriculture reports," Roose said.

 

The USDA is scheduled to release the reports at 8:30 a.m. EDT (1230).

 

The average of 14 analysts surveyed by Dow Jones Newswires expect 2007-08 corn ending stocks at 1.058 billion bushels, with an extremely wide range of estimates from 742 million bushels to 1.465 billion.

 

The market saw weak longs exiting the market ahead of the report with the technical weakness adding to the losses, a commission house analyst said.

 

On daily open auction charts, July corn settled below its 200-day moving average for the first time since September.

 

Export sales were below the range of estimates and had little positive impact on the market, a floor trader said.

 

The USDA reported weekly corn export sales were 543,300 metric tonnes for the week ended May 3, below the 550,000-900,000 tonnes expected.

 

Export sales announced for Japan and South Korea provided some support at the opening but the market was unable to maintain the strength.

 

The USDA reported Japan bought 284,480 metric tonnes of corn and South Korea purchased 550,000 tonnes.

 

Midday weather forecasts were little changed from prior predictions with some forecasters expecting drier weather for late next week.

 

Corn's price direction Friday depends on the numbers in the government's reports, a floor trader said.

 

Commodity fund selling was estimated at 3,000 contracts.

 

In options trading, Man Financial bought 500 July US$4.20 calls and sold 500 July US$4.60 calls.

 

Oat futures settled mostly lower, pressured by fund selling in most months and spillover weakness from corn, a commission house analyst said. Late buying interest helped July end slightly higher, the analyst added.

 

July oats settled 1/2 cent higher at US$2.55 1/2 per bushel while December fell 2 cents to US$2.47.

 

Ethanol futures ended higher in thin trading. June ethanol settled 4 cents higher at 2.14 per gallon and July gained 3 cents to US$2.095.