November 14, 2007

 

CBOT Corn Review on Tuesday: Lower on energy markets sell-off

 

 

Chicago Board of Trade corn futures settled lower and near session lows Tuesday as steep declines in crude oil and metal futures kept corn on the defensive for most of the day.

 

December corn settled 4 1/4 cents lower at US$3.74 3/4 a bushel, December crude oil ended US$3.43 lower at US$91.19 a barrel and December gold declined US$8.70 to US$799.00 an ounce.

 

With its ethanol component, corn followed the energy markets lower, but the declines were contained due to strength in soybeans, said Tim Hannagan, an analyst at Alaron Trading.

 

January soybeans made a new life-of-contract high during the session and settled 10 cents higher at US$10.56 1/4 a bushel on strong demand. Without the gains in soybeans, corn prices would have been sharply lower, Hannagan said.

 

News that Informa Economics increased its estimate of 2008 planted corn acreage to 88.9 million acres from its October estimate of 85.8 million acres also added to the selling interest, a trader said. In 2007, U.S. farmers planted 93.6 million acres.

 

A late slide in wheat futures also increased negative sentiment, and commodities in general sold off with money flowing into equities Tuesday, a commission house analyst said.

 

Corn could see further unwinding of long positions Wednesday if speculative money continues to flow out of commodities, the commission house analyst said.

 

On daily technical charts, electronically traded December settled below its 10-day moving average but above its 200-day moving average and at its lowest level since Nov. 1.

 

In options trading, FC Stonnee sold 1,500 March US$4.00 puts and RJ O'Brien bought 500 December US$4.20 calls.

 

In open auction activity, fund selling was estimated at 3,000 contracts.

 

Oat futures settled mixed as spillover selling from wheat and corn limited the upside, an analyst said.

 

December oats rose 1 cent to US$2.86 1/2 a bushel, while March declined 1/4 cent to US$2.99 3/4.

 

Ethanol futures ended lower. December ethanol retreated 3 cents to US$1.83 a gallon, and January fell 6 cents to US$1.745.