December 7, 2005

 

CBOT Corn Review on Tuesday: Ends down on technical correction

 

 

Corn futures on the Chicago Board of Trade ended lower across the board Tuesday in a technical correction from Monday's overdone gains, traders said.

 

CBOT December corn finished 2 3/4 cents lower at US$1.90 3/4, and March ended 2 1/2 cents lower at US$2.04 1/4 per bushel.

 

The loss of technical support in the market attracted fresh selling pressure, as the fundamental sentiment of market is still bearish, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

The market was lifted on technical buying Monday, but without any follow- through buying, futures remained vulnerable to the fundamental facts of the market. Speculation that the U.S. Department of Agriculture on Friday will lower its US 2005-06 corn export forecast and increase carryout coupled with huge nearby supplies remain a hindrance to upside potential.

 

The average of estimates from analysts surveyed by Dow Jones Newswires pegs 2005-06 U.S. corn ending stocks at 2.339 billion bushels from a range of 2.169 billion to 2.400 billion. The USDA is scheduled to release its latest carryout projections in its supply and demand report Friday at 7:30 a.m. CST.

 

The theme was consistent throughout the day, with technical selling amid the March contract's ability to penetrate support at its 20-day moving average adding weight to prices.

 

The market doesn't have well-defined fundamental legs to sustain upward strength, with huge carryover stocks and exports running slow serving as the catalysts for futures to give back gains readily, said John Kleist of Kleist Agricultural Consulting.

 

In pit trades, Shatkin/Arbor bought 800 March, Fimat and Refco each bought 300 March.

 

On the sell side, ADM Investor Services sold 1,000 March, Calyon Financial sold 2,300 March, Man Financial sold 2,500 March, O'Connor sold 1,000 March and Rand Financial sold 500 March. Commodity fund selling was estimated at 7,000 contracts.

 

Oat futures ended lower, scaling back an early push to contract highs on speculative selling and spillover weakness from other grains. CBOT March oat futures set a contract high of US$1.97 1/4.

 

Otherwise, traders are awaiting Wednesday's Statistics Canada report on 2005-06 oats production. In October, StatsCan forecast the 2005-06 oats crop at 3.334 million metric tonnes, smaller than 3.683 million tonnes last year. Analysts forecast StatsCan would report Wednesday a crop of 3.30 million to 3.80 million tonnes. March oat futures settled 3/4 cent lower at US$1.95.