August 17, 2007

 

CBOT Corn Review on Thursday: Ends lower on outside market sell-off

 

 

Chicago Board of Trade corn futures ended lower Thursday but well above levels reached earlier in the session as the steep sell-off in financial markets pressured corn values, analysts said.

 

Sep corn fell 6 1/2 cents to US$3.21 1/2 per bushel, Dec settled down 6 1/4 cents to US$3.39 and Mar also settled 6 1/4 cents lower at US$3.54 1/4.

 

"The turmoil and uncertainty in financial circles hit everything Thursday," said Dale Durchholz, senior analyst at Agrivisor in Bloomingtonne, Ill. "It was across the board as everything is suffering from some degree from the uncertainty and corn was not going to be left out."

 

Sharply lower soybean values also added pressure, with soybeans trading limit down before recovering near midday. November soybeans settled 40 cents lower at US$8.14 1/2.

 

Corn began recovering from steep double-digit losses after mid-session as the stock market stabilized at lower levels and panic liquidation subsided, a trader said.

 

End user buying also contributed to prices stabilizing near the close, the trader said.

 

Near-term weather was modestly negative for prices, with rainfall over much of the U.S. Midwest expected to help corn in its grain-filling stage, however the market ignored the weather.

 

Weekly export sales were better-than-expected but also had little impact. The U.S. Department of Agriculture reported weekly corn export sales totaled 1.490 million metric tonnes for the week ended Aug. 9, well above the range of 450,000 to 800,000 metric tonnes expected by analysts. Included in the total were sales of 1.702 million tonnes for delivery in the 2007-08 marketing year, which was partially offset by a negative 212,000 tonnes for delivery in 2006-07.

 

Price direction on Friday depends on what the equity markets do overnight and whether or not people want to cover their positions ahead of the weekend, a commission house analyst said.

 

On daily technical charts, electronically traded December settled below its major moving averages and traded down to its lowest level since mid-July.

 

Fund selling was estimated at 12,000 contracts.

 

In open auction trading, JP Morgan bought 1,000 Dec, Iowa Grain sold 1,000 Dec and ADM Investor Services sold 800 Sep.

 

In options trading, UBS bought 8,000 October US$3.10 puts and sold 8,000 December US$2.80 puts.

 

Oat futures settled lower as "it was a get-out-of-the-way type of day," a commission house analyst said.

 

The outside markets influenced oat price direction and fund selling added to the weakness, a trader said. Commercial buying in Dec helped limit the losses, the trader said.

 

Sep oats fell 5 cents to US$2.44 1/2 per bushel, Dec declined 7 1/2 cents to US$2.50 1/2, and Mar ended down 7 1/2 cents to US$2.62 1/2.

 

Ethanol futures ended lower in modest trade. Sep ethanol fell 5.4 cents to US$1.80 per gallon and October settled 3.5 cents lower at US$1.71.