October 4, 2007

 

CBOT Corn Review on Wednesday: Lower on technical weakness

 

 

Chicago Board of Trade corn futures settled lower Wednesday in two-sided activity, pressured by technical and fund selling, analysts said.

 

December corn declined 4 1/4 cents to US$3.44 1/2 per bushel, with March settling 4 1/2 cents lower to US$3.61.

 

"It was a sloppy session," said Ross Carstens, broker/analyst at Commodity Services in Des Moines, Iowa.

 

Technically, December corn had a potential island reversal in Tuesday's trade on daily technical charts, and that exerted additional technical pressure Wednesday, he said.

 

Commodity fund selling added to the weakness, he said.

 

Commodity fund selling was estimated at 3,000 contracts.

 

The market staged a rally near midday, trading higher as wheat futures reversed early steep declines to move sharply higher.

 

However, wheat was unable to maintain their large gains and corn prices turned negative once again, a trader said.

 

December wheat settled 4 1/2 cents higher at US$9.27 per bushel, after trading as high as US$9.44.

 

Corn is still following wheat and when "wheat sneezes, corn catches a cold," said Vic Lespinasse, an analyst at Cytrade Futures. Seasonally, this is the time of the year when corn prices are expected to be on the defensive, he said.

 

The recent upward trend appears to be changing, a trader said.

 

Price direction on Thursday will depend on the export sales report as well as what wheat does in overnight trading.

 

On daily technical charts, electronically traded December corn settled below its major moving averages and at its lowest level since Sept. 11. The 14-day Relative Strength Index in December is 42.20.

 

In options trading, UBS bought 5,000 December US$3.00 puts and MF Global bought 2,000 December US$4.00 calls.

 

Oat futures settled modestly higher Wednesday in light trade as the market bounced back from the aggressive sell-off Tuesday, an analyst said.

 

December oats settled 3 1/2 cents higher at US$2.79 1/2 per bushel.

 

Ethanol futures ended mixed in very light activity. October ethanol settled unchanged at US$1.585 per gallon and November rose .002 cent to US$1.57.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended Sept. 27 at 8:30 a.m. EDT. Analysts expect corn sales between 800,000-1.3 million metric tonnes.