February 8, 2006

 

CBOT Corn Review on Tuesday: Lower on spec, local sales

 

 

Corn futures on the Chicago Board of Trade fell Tuesday, stumbling lower on speculative and local selling, as broad-based commodity weakness and a lack speculative support pressured prices.

 

CBOT March corn finished 4 3/4 cents lower at US$2.18, and May ended 4 1/2 cents lower at US$2.28 1/2 per bushel.

 

The loss of fund buying in the market set the stage for the declines, with pressure from outside markets and the inability of futures to generate any upside technical momentum attracting fresh selling pressure, analysts said.

 

The market meandered around unchanged for most of the day, with local selling applying mild pressure while fund-related buying in the options pit provided support, said CBOT commission house broker.

 

This was consistent until local and fund selling pressed prices into sell-stop orders down the stretch, with futures setting session lows on the close. Speculative longs took profits on positions, as traders were not presented with any reason to push upside moves.

 

Without the benefit of fund buying, futures will drift lower as the fundamental characteristics of the market are not supportive to prices, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Otherwise, spreading was a featured attraction, with JP Morgan, O'Connor, Calyon Financial and FCStonnee actively working the May/March spread while ADM Investor Services and Tenco were on the other side of the spread, traders said. Light positioning ahead of Thursday's supply and demand report was reported as well.

 

The U.S. Department of Agriculture is scheduled to release its monthly supply and demand report Thursday 7:30 a.m. CST (1330 GMT). The average of analyst estimates pegs corn ending stocks at 2.384 billion bushels from a range of 2.298 billion to 2.426 billion bushels. Analysts anticipate the government will show higher exports, ethanol usage and feed demand in the report.

 

In pit trades, Calyon Financial and DT Trading were featured buyers. On the sell side, Fimat, Citigroup, ABN Amro, UBS Securities and O'Connor were active sellers.

 

In other news, the Brazilian Census Bureau, or IBGE, said Tuesday that Brazilian 2005-06 total corn production would be 22% higher than the 2004-05 total, hitting 42.6 million metric tonnes.

 

Ethanol futures ended mixed, with the March future settling 1 cent higher at US$2.54 per gallon.

 

Oat futures ended sharply lower in step with the lower theme in other commodities. CBOT March oat futures settled 13 cents lower at US$1.88 3/4 and May oats ended 11 3/4 cents lower at US$1.88 3/4 per bushel.