December 5, 2006

 

CBOT Corn Review on Monday: Down on technical selling, liquidation

 

 

Chicago Board of Trade corn futures settled at moderately lower levels Monday as long liquidation and technical selling pressured prices, sources said.

 

December corn fell 11 1/4 cents to US$3.62 3/4 per bushel and March declined 11 1/2 cents to US$3.75 1/2. e-CBOT day session volume in March was 64,042 contracts.

 

"Corn saw some classic liquidation in a market which has digested the bull news in the short-term," said Don Roose, president of US Commodities in West Des Moines, Iowa. Technically, the market was heavy after being positive for so long.

 

In addition, there are some concerns that there could be more corn acres planted next year with some CRP acres also coming out of the reserve, he said. The "fear news" was prevalent in the market Monday, Roose added.

 

Corn was weaker in overnight trade and opened lower than expected, which led to some liquidation of positions above where prices were trading, adding to Monday's declines, a floor analyst said. In addition, corn traded below some support levels and the deliveries were heavy without a strong stopper, he added.

 

Deliveries posted against the December contract were 1,187 contracts Monday. Large issuers included the customer account of RJ O'Brien, which issued 587 contracts; the customer account of Fortis, which issued 200 contracts; and the house account of Deutsche Bank, which issued 277 contracts. Large stoppers included the house account of Deutsche Bank, which stopped 1,108 contracts.

 

Export inspections were near the high end of analysts' estimates but not enough to halt the move to lower levels, a floor trader noted.

 

The U.S. Department of Agriculture reported export inspections were 42.042 million bushels for the week ended Nov. 30, within the 35 million to 44 million bushels expected.

 

The weak longs were exiting their positions, a commission house analyst said.

 

Sharp declines in soybean futures added to the weak tonnee, the analyst added. January soybeans fell 17 3/4 cents lower to US$6.59 1/4 per bushel.

 

Buyers Monday included FC Stonnee, which bought 1,500 March; JP Morgan, which bought 2,000 March; Rand, which bought 500 March; and Fimat, which bought 400 December.

 

UBS sold 1,000 March; Man Financial sold 2,000 March; Citigroup sold 1,000 March; and Kottke sold 600 May.

 

Overall fund selling was estimated at 3,000 contracts.

 

In spread trading, Fortis bought 1,200 Dec 07-Mar 07.

 

Oat futures ended lower, as they followed the rest of the markets lower, a floor source said. Oats are not a leader and followed the rest of the floor, a trader noted.

 

December oats settled 4 cents lower to US$2.52 per bushel and March also fell 4 cents, to US$2.64 1/4.

 

Ethanol futures settled slightly higher in thin trade. The December contract gained 7 cents to US$2.385 per gallon. The January contract rose 6.5 cents to US$2.29.