September 28, 2006

 

CBOT Corn Review on Wednesday: Lower; late long liquidation weighs

 

 

Chicago Board of Trade corn futures finished lower Wednesday, making new lows on the close on long liquidation after the market was unable to maintain early technical-based gains, sources said.

 

December declined 5 1/4 cents to US$2.53 3/4 cents per bushel, and March ended down 5 cents at US$2.67 3/4. e-CBOT day session volume in December was 49,672 contracts.

 

December corn was able to fill a gap from early August in overnight trade on technical charts but the market couldn't test the overnight high, which signaled that buying interest was pretty well exhausted, said Shawn McCambridge, senior grain analyst with Prudential Financial in Chicago.

 

Technically, the Relative Strength Index was indicating an overbought situation as well and some participants took profits, he added.

 

The 14-day RSI on Tuesday stood at 63.79, close to the 70.0 level that indicates overbought conditions.

 

In addition, the recent gains were a counter-seasonal move, McCambridge said. Usually during this time frame prices come under pressure from the harvest, he noted.

 

The absence of institutional-type buying pressured futures after the higher opening with the lack of buying leading to the late liquidation, a commission house analyst said.

 

In addition, the quarterly stocks report is due Friday, so people evened up some of their positions, he added.

 

In a Dow Jones Newswire survey of 14 analysts, the average 2005-06 quarterly stocks estimate was 1.967 billion bushels, below the 2.012 billion ending stocks figure in the Sept. 12 U.S. Department of Agriculture supply and demand report.

 

Buyers Wednesday included Fimat, which bought 600 December; Tenco, which bought 600 December; Fortis, which bought 500 December; and UBS, which bought 500 July.

 

Rand Financial sold 2,500 December, Fortis sold 500 July and ABN Amro sold 300 December.

 

Commodity fund selling was estimated at 3,000 contracts.

 

In options trading, Man Financial bought 2,000 December US$2.80 calls and 1,000 March US$2.50 puts.

 

Oat futures ended slightly higher as light fund buying underpinned prices in thin activity, a floor trader said.

 

December oats ended 1 3/4 cents higher at US$2.04 per bushel and March also finished 1 3/4 cents higher, at US$2.10.

 

Ethanol futures settled higher in light trade. October ethanol settled 4 cents higher at US$1.72 per gallon and November ended up 5 cents at US$1.723.

 

On Thursday, the USDA is scheduled to release the weekly export sales report for the week ended Sept. 21 at 7:30 a.m. CDT. Analysts forecast sales between 700,000-1.0 million tonnes. Sales for the week ended Sept. 14 totaled 1.016 million tonnes.