December 29, 2007

 

CBOT Corn Review on Friday: Falls on profit taking; wheat, soy losses

 

 

Corn ended weaker at the Chicago Board of Trade Friday, pressured by profit taking in the last full trading day of 2007.

 

Most-active March corn settled at US$4.52, down 2 3/4 cents a bushel.

 

Corn prices were in a lackluster mode on Friday, despite the supportive export data from the U.S. Department of Agriculture.

 

USDA said corn export sales for the week ended Dec. 20 totaled 1.42 million metric tonnes, above market expectations. USDA said the sales total was 22% above the previous week and 9% over the prior four-week average.

 

"We rallied into the number, really," said Jerry Gidel, analyst at North American Risk Management Services. Gidel also said the market rallied ahead of Thursday afternoon's USDA hog and pig report, which showed expansion of the hog herd, thus more animals to feed.

 

On the week corn gained 8.5 cents, setting a contract high of US$4.57 for the March contract in Friday's session, despite the lackluster action.

 

Gidel said that with wheat down sharply, that likely lent a mildly bearish tonnee to the market. March wheat hit limit down late in the session, pulling down soybeans, too. Unlike Thursday when corn withstood weakness in the neighboring pits, the market was unable to shake off the weakness Friday.

 

Speculative buying has been a factor in corn this week, even with it being a holiday week, as there was some positioning ahead of 2008. Several commodity indexes will have new weightings for the New Year and in many of them corn's weighting will be slightly higher. That has given speculators a reason to buy corn, thinking prices will rise.

 

Gidel, though, said it's important to be cautious. While corn's weighting will be up, soybeans and wheat will be down. "If we take soybeans and wheat down 50 cents, corn will probably be down, too," he said.

 

Monday the CBOT will close grain trade early, at 1 p.m. EST, ahead of the New Year's Day holiday. The exchange will be close Tuesday.

 

Buyers in corn included JP Morgan buying 300 March; R.J. O'Brien buying 400 March; and Fimat buying 200 March. Sellers include FCStonnee selling 200 March and Citigroup selling 200 May. Traders noted spreads were a feature, with J. P. Morgan, Fortis and Man Financial each spreading 300 March-May corn. Man Financial bought 5,000 March US$4.10 puts.