October 25, 2005

 

CBOT Corn Review on Monday: December under US$2 on funds, spillover

 

 

Corn futures at the Chicago Board of Trade settled modestly lower Monday, declining to new life-of-contract lows in several months, with December falling below the key psychological support level of US$2 on spillover weakness from wheat and soybeans along with fund selling, sources said.

 

December corn, after trading as low as US$1.99 1/4, a new contract low, finished 2 cents lower at US$1.99 1/2 per bushel. March corn fell 1 3/4 cents lower to US$2.12 3/4 per bushel and May corn lost 1 1/2 cents to US$2.21 1/4 cents per bushel.

 

"Although there was good commercial pricing today, spillover selling from wheat and soybeans early in the day pushed it lower and the funds were more aggressive sellers than recently, which also helped push the market lower," a commission house broker said.

 

Commodity fund selling was estimated at 7,000 contracts Monday.

 

Corn prices continued their recent role as a follower, with wheat futures settling moderately lower as technical selling and precipitation in key U.S. growing areas kept that market on the defensive. December wheat ended 6 3/4 cents lower at US$3.23 1/4. Soybean futures recovered to finish at slightly higher levels.

 

Active spreading of wheat/corn added to the market's weak tone, with spreading of several thousand contracts traded, sources said.

 

"There's not much of anything new to talk about, and most people think the government will raise its production estimate in November," a floor trader said.

 

In last week's crop progress report, several analysts noted crop conditions continue to show improvement, which they believe points to a larger crop size than the 10.857 billion bushels reported in October by the U.S. Department of Agriculture.

 

Traders and analysts expect the percentage of the crop harvested to be near 65%, up from last week's 49%.

 

Generally favorable harvest weather is predicted across much of the U.S. Midwest over the next several days, DTN Meteorlogix weather said.

 

Buyers on Monday included Cargill buying 4,000 December, Fimat bought 800 December and 200 March, Man Financial buying 500 December and 200 March and DT Trading buying 600 December.

 

Sellers on Tuesday included O'Connor selling 2,500 December, Man Financial selling 1,100 July and 300 December, Calyon Financial selling 1,100 December, Tenco selling 2,000 December, Iowa Grain selling 1,000 March, ABN Amro selling 800 December and Fimat selling 800 December.

 

Oat futures ended moderately higher as light fund buying underpinned prices, traders said. The December contract rose 2 3/4 cents to US$1.68 1/2.

 

Ethanol futures settled at mostly higher levels on Monday. The January contract did not trade but rose 1 1/2 cents to US$1.80 cents per gallon.