November 8, 2005

 

CBOT Corn Review on Monday: Down slightly; spillover, techs, spreading

 

 

Corn futures at the Chicago Board of Trade weakened slightly Monday on spillover pressure from soybeans and wheat and a lack of any bullish news to start the week, sources said.

 

Fresh lows were set once again in the December, March and May contracts.

 

The official start of the Goldman Roll kicked off Monday, which saw heavier-than-normal spread trading as some large traders began rolling positions out of the front month, sources said.

 

Most-active December corn settled 3/4 cent lower at US$1.94 3/4, March corn was down 1/4 cent at US$2.09 1/2 and May ended 1/4 weaker at US$2.17 1/2 a bushel.

 

"We're in oversold conditions, but there's not much in terms of fundamental support coming into the market. Recent losses and today's (Monday) session were more technically inspired than anything," said Shawn McCambridge, senior grains analyst at Prudential Financial in Chicago.

 

Support for December corn at US$1.95, which also was the September contract's expiration, was "just too tempting" for traders to resist, and bears pushed prices through that level to a fresh contract low of US$1.94 1/4 a bushel, McCambridge said.

 

March corn set a new low at US$2.08 3/4 and May corn also made a fresh US$2.17 low.

 

Meanwhile, farmers are expected to have made good progress on the final stages of the corn harvest, with the U.S. Department of Agriculture expected to report anywhere from 89%-92% complete in Monday afternoon's weekly crop report. Last week the harvest was 80% complete.

 

"We'll probably get one more report next week and that'll be it," McCambridge said, at which time the market will shift all of its focus to demand.

 

Weekly export inspections released Monday morning lagged the previous week's total and helped hem in prices on the downside, a trader said.

 

Export inspections for the week ended Nov. 3 totaled 34.301 million bushels, compared to 36.455 million the previous week. One year ago, inspections were 47.067 million, the USDA said. Corn inspections for 2005-06 to date total 315.699 million, compared to 318.121 million at the same time last year.

 

The western corn belt is expected to see dry conditions over the next five days, with the possibility of light showers late Tuesday and early Wednesday, private forecaster DTN Meteorlogix said. Temperatures will remain above to much-above normal. The eastern belt will be see a few light showers Tuesday. Scattered showers and storms with 0.10-0.50 inch of rain are expected Wednesday, with dry conditions Thursday and Friday.

 

In outright trades, Tenco sold 1,000 December, Fimat sold 1,000 March and ABN Amro sold 900 December. Fimat bought a net 700 December, Iowa Grain and FCStone each bought 500 December, Tenco bought 500 March, and R.J. O'Brien, Cargill and ADM each bought 200 December.

 

On the spreads, Fimat spread 2,500 March/December and O'Conner traded 2,000 of the same.

 

Cargill, Produce Grain, FCStone and R.J. O'Brien each spread around 1,000 December/March contracts.

 

Tenco spread 2,000 December 2005/December 2006 contracts and CIS spread 1,000 of the same.

 

Iowa Grain reportedly spread 7,000 December 2006/December 2005 contracts, which was thought to be linked to long-only index fund activity.