September 6, 2006

 

CBOT Corn Review on Tuesday: Ends lower; unable to hold early gains

 

 

Chicago Board of Trade corn futures settled lower Tuesday, unable to maintain early gains as the lack of additional buying interest and profit taking weighed on the market, sources said.

 

September corn fell 1 1/4 cents to US$2.28 3/4, with December settling 1 1/2 cents lower at US$2.44 1/4. E-CBOT day session volume in December totaled 44,972 contracts.

 

Spillover support from stronger wheat prices helped corn establish good gains early in the session, as did higher prices in overnight trade, floor sources said.

 

Supportive production and yield estimates from FC Stonnee on Friday also contributed to the early positive tonnee, sources added.

 

However, the absence of fresh buying interest and the inability to trade above technical resistance at US$2.50 in December helped bring about profit taking, a floor broker said.

 

The inability of wheat futures to retain most of its gains also added to the late weakness, a commission house analyst said.

 

Corn is fairly overbought with the recent move to new swing highs and was due for a correction, said John Kleist of Top Third Ag Marketing.

 

In addition, December corn stopped right below US$2.50 and couldn't fill the gap on open-auction technical charts between US$2.50 and US$2.52, which contributed to profit taking, he noted.

 

On technical charts, December traded an outside day with a higher high and a lower low than Friday's trading range and remained between its 20-day and 40-day moving averages.

 

Export inspections were released during the trading session and had little impact.

 

The U.S. Department of Agriculture reported 43.277 million bushels of corn were inspected for export in line with analysts' expectations and almost unchanged with the 44.306 million inspected last week.

 

Buyers Tuesday included ABN Amro, which bought 1,000 December, and Fimat, which bought 500 December.

 

Goldenberg-Hehmeyer sold 1,500 December 2007, Rand Financial sold 1,000 December, Citigroup sold 600 December and JP Morgan sold 500 December.

 

Commodity fund selling was estimated at 400 contracts. Oat futures finished higher Tuesday as light fund buying helped support prices, a commission house analyst said. Light hedge-related selling near the highs of the session trimmed some of the gains, a floor trader said.

 

September oats settled 4 1/4 cents higher to US$1.88 per bushel and December rose cents to US$1.95 3/4.

 

Ethanol futures settled mixed in modest activity. September ethanol fell 3.5 cents to US$2.15 per gallon and October ended 7.5 cents lower at US$2.11.

 

Tuesday afternoon, the USDA is scheduled to release the weekly crop progress report at 3 p.m. CDT (2000 GMT). Last week, 57% of the U.S. corn crop was rated in good-to-excellent condition.