November 10, 2005

 

CBOT Corn Review on Wednesday: Dec unchanged; traders even positions

 

 

December corn futures closed unchanged Wednesday at the Chicago Board of Trade in nearly featureless activity as traders squared positions ahead of the release of November crop data.

 

Spillover buying from firmer soybeans and a rally in the wheat market held December corn in firmer territory for most of the day, but late selling took corn to unchanged by the closing bell.

 

December corn settled unchanged at US$1.95 1/4 a bushel, March ended 1/2 cent lower at US$2.09 1/2 and May was down 1/4 cent at US$2.17 3/4.

 

"It was pure positioning and spread adjustments in awkward, choppy trade ahead of the report," said independent agricultural analyst John Kleist.

 

Many traders and analysts expect the U.S. Department of Agriculture to nudge up its November corn production estimate Thursday morning to 10.965 billion bushels on average, from 10.857 in October. U.S. carryout is seen at an average 2.281 billion bushels, from 2.22 billion in October.

 

"I don't think too many people are concerned on the supply end of this thing. I mean, what's a hundred million bushels here or there?" Kleist said.

 

Export demand, which has been less than stellar, is more important to the market now with the crop over 90% harvested, sources have said. And with issues such as bird flu and competition from other feedgrains hanging over the market, U.S. corn could have a tough time in the near term.

 

Weekly export sales, also scheduled for release Thursday, are expected to total 700,000-1.1 million metric tonnes, compared to 1.218 million the previous week.

 

The Philippines is seeking 100,000 metric tonnes of corn for December or January shipment.

 

Taiwan is expected to tender Thursday for up to 60,000 tonnes of U.S. NO. 2 yellow corn for shipment Dec. 17-31 from the U.S. Gulf or Jan. 1-15 from the Pacific Northwest.

 

Meanwhile, China's corn prices fell slightly in the week to Wednesday, extending mild declines from the previous week on bird flu concerns. Recent outbreaks of bird flu in poultry flocks in at least four provinces have hurt China's poultry sector and weakened demand for poultry feed.

 

Recent bird flu cases in northeastern Japan poultry, however, are likely unrelated to the deadly H5N1 strain that has been found in Southeast Asia since 2003, a Tokyo government official said Wednesday. Officials detected signs of the H5N2 virus, which is considered far less dangerous than the H5N1 strain.

 

In the U.S., basis levels for corn have improved dramatically from sharply lower levels in many river and interior locations as barge freight rates have recently plummeted, sources noted.

 

In outright CBOT trades, Iowa Grain sold 2,000 December, Calyon Financial sold 1,700 December, Fimat sold 600 March and CIS sold 200 December.

 

Fimat bought 1,200 December, Citigroup Global Markets bought 800 March, R.J. O'Brien bought 400 May, Refco and Man Financial each bought 200 December, and Tenco bought 200 March.

 

Fimat spread 2,500 December/March at 14 1/4 cents but also spread 4,000 March/December. R.J. O'Brien and Rand Financial each spread 1,000 March/December corn.

 

Funds sold a net 600 contracts.

 

December ethanol futures settled 1 cent lower at US$1.99 1/2 a gallon and January was up 4 cents at US$1.92.

 

December oat futures were down 1/4 cent to US$1.65 3/4 a bushel.