October 27, 2005

 

CBOT Corn Review on Wednesday: Down on fund sales, hedge pressure

 

 

Corn futures at the Chicago Board of Trade settled modestly lower Wednesday, with new life of contract lows set in several months, as fund selling and a continued lack of fresh buying interest at current price levels combined to undermine futures, sources said.

 

December corn settled 1 1/4 cents lower at US$1.98 1/4 per bushel, March fell 1 cent to US$2.11 3/4, and May corn slipped 3/4 cent to US$2.20 1/2. All three months set new life of contract lows on Wednesday.

 

"The market continues to grind lower," said Vic Lespinasse, of A.G. Edwards and Sons. "The funds were sellers today, the weather remains favorable to harvest activities and the bird flu is a negative issue as well."

 

Commodity fund selling was estimated at 2,500 contracts on Wednesday.

 

Light hedge related selling was also noted by floor traders as the harvest continues to roll.

 

Mostly dry weather is forecast for much of the U.S. Midwest over the next several days allowing producers to remain in their fields, harvesting what is expected to be the second largest crop on record following last year's 11.807 billion bushel crop.

 

Continued reports of the spread of Asian bird flu added to the weak tone, with concerns that it could negatively impact demand for soymeal, making it more difficult to export corn. Corn and soymeal are competitive sources of feed in some industries.

 

Spillover weakness from soybeans also contributed to the negative tone. Light speculative selling and the lack of fresh news pressured soybeans, sources said. The November contract declined 6 1/2 cents to US$5.71 1/2.

 

Buyers on Wednesday included Cargill buying 100 May and 200 December, Tenco buying 700 May and 500 March, Man Financial buying 200 March and Citigroup which purchased 200 March.

 

Sellers Wednesday included Cargill selling 2,000 March, Citigroup selling 1,500 December, O'Connor selling 500 December, Man Financial selling 500 December and Calyon Financial selling 400 December.

 

In spread trading, Cargill bought 300 December-March, and R.J. O'Brien bought 300 December-March.

 

Oat futures ended moderately lower with the December contract declining 3 3/4 cents to US$1.63 1/4 per bushel.

 

Ethanol futures settled mostly higher despite lower energy prices. The January contract gained 6 cents, settling at US$1.90 per gallon.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended October 20. Analysts expect corn export sales between 1.0 and 1.15 million metric tonnes. Last week sales were 966,100 metric tonnes.