December 19, 2006

 

CBOT Corn Review on Monday: Ends lower on year-end speculative selling

 

 

Chicago Board of Trade corn futures retreated lower Monday, backpedaling on speculative selling associated with end-of-the-year liquidation, analysts said.

 

March corn ended 3 1/4 cents lower at US$3.65 3/4 per bushel, and May dropped 3 1/4 cents to US$3.73 3/4.

 

Broad-based commodity weakness, a larger-than-expected fund long position in the market as well as talk of China cutting back corn use in its biofuels programs served as catalysts to encourage consolidation in the market, analysts said.

 

The defensive tonnee was consistent from the outset, with futures carving out multi-week lows, before end of the day position evening surfaced to trim the declines, traders added.

 

Meanwhile, futures managed keep a floor under prices, as the ability of nearby contracts to hold support above major moving averages provided a boost to lift futures from its lows, an analyst said.

 

The weight of Friday's commitment of traders report placed pressure on the market, as traders remained leery of further liquidation pressure emerging before the year's end in absence of fresh supportive fundamental news, traders said.

 

The Commodity Futures Trading Commission said funds were net long 291,875 contracts CBOT corn futures and options combined, a little longer than most market participants expected. This is a gross rise of 11,598 long contracts.

 

Otherwise, futures encountered little fresh news to provide directives, with sale of corn to unknown destinations and a within-expectation export inspection figure having little impact on prices, analysts added.

 

In news, the Agriculture Secretariat said Argentina had sold 8.585 million metric tonnes of 2005-06 (March-February) corn for export, unchanged from the past three weeks, according to the latest data.

 

In pit trades, Iowa Grain bought 700 March, JP Morgan bought 1,000 March, Rand Financial bought 300 March and 300 December. Fortis sold 500 March, Fimat sold 500 July, ADM Investor Services sold 300 July, Citigroup sold 400 March, and Man Financial sold 300 March.

 

Oat futures settled lower across the board, with speculative fund selling a featured attraction. Funds sold early and came back and bought to trim the losses, said a CBOT floor trader. March oats settled 5 3/4 cents lower at US$2.60 per bushel.

 

Ethanol futures ended mixed. The January contract finished 2 cents higher at US$2.35 per gallon. The February contract settled 3 cents lower at US$2.25.