November 25, 2009

 

CBOT Corn Review on Tuesday: Slides on fund selling, profit-taking

 

 

Profit-taking by funds and technical selling drove Chicago Board of Trade corn futures to close near session lows Tuesday, traders and analysts said.

 

December corn ended 11 1/4 cents lower at US$3.76 per bushel, while March corn lost 11 1/4 cents to US$3.92.

 

Funds were booking profits ahead of the end of the month, said Tim Hannagan, analyst for PFG Best. Tuesday was one of the last full trading sessions in the last full week of November.

 

The CBOT is closed Thursday for the Thanksgiving holiday and trades an abbreviated day session Friday. Monday is seen as the first day of the new month, even though it is Nov. 30, Hannagan said.

 

"Funds are taking profits this week," he said. "Index and trend-following funds were fat with profits."

 

Commodity funds sold an estimated 9,000 contracts, traders said.

 

Corn faced some technical pressure after a bearish "outside day lower" Monday, when December corn traded above and below Friday's range before closing weaker, traders said. December corn on Tuesday closed below a technical support level around US$3.80, an analyst said.

 

The market slumped with U.S. wheat futures, while neighboring CBOT soy stayed supported. Corn and wheat lack the fundamental support from strong demand that helped boost soy, traders said.

 

The low for CBOT corn between Monday and Wednesday this week should remain its low until the USDA issues its next monthly crop production and supply/demand reports Dec. 10, Hannagan said. Uncertainty about the size of the U.S. crop and expectations that the USDA will lower its production estimate should help underpin prices, he said.

 

In other news, CME Group (CME), parent company of the CBOT, said it won't impose vomitoxin limits for CBOT corn deliveries as previously planned. Officials reached the decision after talking to customers and reviewing vomitoxin reports, according to the exchange.

 

The vomitoxin specifications would have been a first for the corn contract, although they have long existed in wheat. Quality has been a concern for the corn crop this season due to wet weather, which can encourage mold and disease.

 

In other markets, CBOT oat futures finished slightly higher. December oats edged up 1/4 cent to US$2.57 1/2 per bushel, and March oats crawled 1/4 cent higher to US$2.71.

 

Ethanol futures finished in negative territory. December ethanol lost US$0.023 to US$2.079 per gallon, and January ethanol dropped US$0.036 to US$1.951.