September 6, 2007

 

CBOT Corn Review on Wednesday: Settles down on profit taking, ignores wheat

 

 

Chicago Board of Trade corn futures ended with moderate losses and near session lows Wednesday, with the market unable to draw any significant support from wheat with corn declining on profit taking and focusing on underlying fundamentals, analysts said.

 

September corn declined 8 cents to US$3.28 3/4 per bushel, December fell 7 1/2 cents to US$3.45 3/4 and March slipped 7 1/2 cents to US$3.61 3/4.

 

"Corn just couldn't keep up with the wheat anymore," said Shawn McCambridge, senior grain analyst at Prudential Financial. Wheat and corn right now don't share the same fundamentals, he said.

 

"There is a short supply situation in wheat and corn is going into harvest looking like it will have a record corn harvest with an increase in ending stocks this year," said McCambridge.

 

December wheat settled limit-up, 30 cents higher at US$8.35 1/2, with spot month Sep up 35 1/2 cents at US$8.42 1/2.

 

Market participants took profits exiting out of long corn positions established earlier, a commission house analyst said. Corn is gearing up for next week's crop production reports, and traders are concerned that yields will be better than earlier expected, the analyst said.

 

FC Stonnee is scheduled to release its production estimate Wednesday afternoon and Informa is expected to release its estimate Thursday, the analyst said.

 

Technical selling also contributed to the weaker tonnee in corn as did lower outside markets, an E-CBOT trader said.

 

Market direction Thursday will depend on the FC Stonnee and Informa crop production estimates as well as the direction of wheat, the E-CBOT trader said.

 

On daily technical charts, electronically traded December settled under US$3.50 and beneath most of its major moving averages.

 

In open auction trading, JP Morgan bought 400 December, and Rosenthal sold 400 December.

 

Commodity fund selling in open auction trading was 2,500 contracts.

 

In options trading, Tenco bought 2,000 December US$4.00 calls, UBS sold 2,000 December US$3.30 puts and MF Global bought 1,000 October US$3.70 calls and sold 1,000 October US$3.30 puts.

 

Oat futures ended at unchanged levels despite the steep gains in wheat futures and fund buying as "oats don't have the same fundamentals as wheat," a commission house analyst said. Sep oats settled unchanged at US$2.57 per bushel and Dec finished flat at US$2.62 1/2.

 

Ethanol futures edged lower in thin trade. Oct ethanol fell 3.9 cents to US$1.56 per gallon while Nov slipped 2.6 cents to US$1.619.