August 29, 2007
 
CBOT Corn Review on Tuesday: Lower on liquidation, harvest pressure

 

 

Chicago Board of Trade corn futures settled lower Tuesday, undermined by long liquidation as market longs trimmed their positions and early harvest pressure, analysts said.

 

September corn settled 8 1/2 cents lower to US$3.27 1/4 per bushel, December fell 8 1/4 cents to US$3.45 and March declined 7 3/4 cents to US$3.61 1/2.

 

The inability of wheat futures to build on strong gains in overnight trading and the beginning of corn harvest activity in the southern U.S. Midwest also added pressure, several analysts said.

 

"Without the support of wheat, the impending approach of a 13-billion- bushel corn harvest is just a natural drag on corn prices," said Dale Durchholz, senior grain analyst at Agrivisor in Bloomingtonne, Ill.

 

The U.S. corn crop is rapidly progressing toward maturity, and the market is looking at corn harvest activity ramping up fast in the Midwest, unless the weather becomes a problem, Durchholz said. "Nobody wants to chase the long side of the market at this point," said Durchholz.

 

CBOT wheat futures traded higher at the opening but were unable to maintain those gains as Egypt bought only Russian wheat in its wheat tender announced early Tuesday.

 

Technically "corn could not get anything going to the upside," with talk of early harvesting overshadowing the charts, an E-CBOT trader said. The weather forecasts also point to favorable conditions for early harvest activity limiting buying interest, the E-CBOT trader said.

 

Continued long liquidation helped lead prices to their lows of the day near the close, a floor trader said.

 

Market direction Wednesday will depend upon the direction of the financial and crude oil markets though some support could be generated by position squaring ahead of the month end, the floor trader said.

 

On daily technical charts, electronically traded December settled below its major moving averages for the first time since mid-August.

 

Commodity fund selling was estimated at 2,500 contracts. In open auction trading, Tenco bought 500 September and 500 March and sold 300 December. MF Global bought 300 September.

 

In options trading, Citigroup sold 1,000 December US$3.50 puts and bought 2,000 March US$4.40 calls.

 

Oat futures settled lower as active fund selling in December pressured prices, a floor trader said. September oats fell 7 1/2 cents to US$2.40 per bushel, December dropped 8 1/2 cents to US$2.52 1/4, and March ended 7 1/4 cents lower at US$2.63 1/4.

 

Ethanol futures ended mixed in light activity. September ethanol fell 4.7 cents to US$1.682 per gallon and October settled 2 cents lower at US$1.63.