November 8, 2007

 

CBOT Corn Review on Wednesday: Lower on crude oil weakness, profit-taking

 

 

Chicago Board of Trade corn futures settled with modest declines Wednesday, unable to hold on to early gains.

 

December fell 1 1/2 cents to US$3.84 1/4 per bushel.

 

Analysts said a move to lower prices in crude oil futures and light profit-taking after recent strength weighed on the market. Corn has been pulled higher by the rally in crude oil and precious metals, and when crude oil couldn't hold its early gains, corn turned lower, a commission house analyst said. Nearby crude oil ended 27 cents lower at US$96.43 per barrel after trading above US$98 per barrel in a volatile session.

 

Although December corn traded above resistance near the September high of US$3.89 1/2, the inability to remain above that level and hedge-related selling led to profit-taking, the analyst said.

 

Despite the weakness, speculative buying interest helped keep corn well supported Wednesday, said John Kleist of Kleist Ag Consulting in Arlingtonne Heights, Ill. The recent rally in crude oil futures to all-time highs has rekindled speculative interest in corn because of its ethanol component, he said.

 

The continued weakness in the U.S. dollar to all-time lows against several major currencies also supplied support to corn, an E-CBOT trader said. Position squaring ahead of Friday's U.S. Department of Agriculture reports also kept the market under thin pressure, the E-CBOT trader said.

 

The USDA is scheduled to release its updated estimates of crop production and supply/demand at 8:30 a.m. EST (1330 GMT).

 

The average estimate for U.S. corn production was 13.261 billion bushels, 57 million bushels below the 13.318 billion forecast in October by the USDA, according to a survey of 24 analysts by Dow Jones Newswires.

 

On daily technical charts, electronically traded December rallied to its highest level since June 22 on daily charts but ended at lower levels.

 

In options trading, Rand Financial bought 1,000 December US$4.00 calls and FCStonnee bought 2,000 December US$3.55 puts.

 

Oat futures settled lower as fund liquidation weighed on prices with some participants exiting out of spread positions, an analyst said.

 

December oats fell 1 1/2 cents to US$2.95 1/4 per bushel and March declined 1 cent to US$3.09.

 

Ethanol futures ended higher in modest trade. December ethanol settled 4.2 cents higher at US$1.869 per gallon and January rose 5 cents to US$1.83.

 

On Thursday, the USDA is scheduled to release the weekly export sales report at 8:30 a.m. EST (1330 GMT). Analysts estimate sales between 600,000 to 900,000 metric tonnes for the week ended Nov. 1.