December 7, 2006

 

CBOT Corn Review on Wednesday: Settles sharply lower on liquidation

 

 

Chicago Board of Trade corn futures settled lower Wednesday, ending with double-digit losses in the nearby months as long liquidation and technical selling pressured prices, sources said.

 

December corn declined 13 1/4 cents to US$3.53 per bushel and March fell 12 cents to US$3.66. e-CBOT day session volume in March was 63,340 contracts.

 

Corn started out weaker than expected and then touched off technical selling that extended the losses, said Vic Lespinasse of A.G. Edwards & Sons. "It looks like the bull move is over for now," he said.

 

The long liquidation is likely to continue in the near term, however, the market has retreated so quickly it is overdone on the downside and could see a bounce, he said.

 

Since making a new life-of-contract high of US$6.93 last Wednesday, March corn has fallen 27 cents.

 

Year-end position squaring was also a feature as some participants booked profits ahead of the upcoming holidays, a floor analyst noted.

 

Heavy losses in wheat futures also added to the downtrend, they said. March wheat futures settled 21 3/4 cents lower at US$4.95 1/2 per bushel.

 

News that a private analytical firm raised its estimate of 2007-08 corn production had little market impact, floor sources said.

 

On open auction technical charts, March settled below its 20-day moving average for the first time since Sept. 15. but ended above its 40-day moving average.

 

Buyers Wednesday included Tenco, which bought 1,500 March; JP Morgan, which bought 1,000 March; FC Stonnee, which bought 700 March; and Rand Financial, which bought 500 March.

 

Rand Financial sold 2,000 March; Man Financial sold 2,000 March; Calyon Financial sold 500 March and 500 July; and ADM Investor Services sold 500 March.

 

Commodity fund selling was estimated at 3,000 contracts.

 

In options trading, Man Financial bought 1,000 May US$3.70 puts and sold 2,000 May US$4.20 calls. Fortis sold 2,000 January US$3.80 calls.

 

Oat futures ended lower in modest trading as spillover selling from corn and wheat weighed on prices, a floor source said. March oats remained above a gap on daily open auction technical charts as light buying interest provided some support, the source added.

 

Fund buying of the deferred contracts was also noted, a floor trader said.

 

December oats settled 3 cents lower at US$2.51 per bushel and March fell 3 1/4 cents to US$2.61 1/2.

 

Ethanol futures ended modestly higher in thin trade. The January contract ended up 2.5 cents at US$2.24 per gallon. The February contract did not trade and settled .002 cent higher at US$2.197.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the period ending Nov. 30. Analysts expect sales between 800,000 and 1.0 million metric tonnes.