April 7, 2004

CBOT Corn Review On Tuesday: Slips Lower In Scale-Down Price Correction
 
Corn futures on the Chicago Board of Trade ended Tuesday's session lower across the board, retracing previous gains as the market consolidates below recent highs.
 
CBOT May corn settled 2 3/4 cents lower at $3.26 3/4, Jly ended 2 3/4c lower at $3.33 1/2, and Dec finished 3c lower at $3.32 1/4 per bushel.
 
Spillover weakness from the neighboring soy market and the rolling of nearby positions into deferred contracts kept pressure on the front end of the market, traders said.
 
New-crop futures fell under the weight of speculative selling also, while solid underlying fundamental outlooks managed to limit downside risks. The weakness was more of a mild technical correction than any change in fundamental outlooks, with weaker longs exiting positions ahead of new margin requirements released by the CBOT.
 
The CBOT announced margins on corn and mini-corn contracts will increase beginning Wednesday. Initial margins on CBOT corn contracts were increased to $608.00 from $540.00 with maintenance and hedge margins each raised $50.00 to $450.00.
 
Nevertheless, consistent domestic and export demand remains a supportive feature, with commercials noted buyers on the break, with large speculative traders scale-down sellers on the day.
 
Ahead of the open, U.S. Department of Agriculture announced private exporters reported the sale of 165,000 metric tons of U.S. corn to unknown destinations for delivery in the 2003-04 marketing year and 55,000 tons were sold to unknown for delivery in the 2004-05 marketing year.
 
Growing interest in weather conditions across the central U.S. added to the fray, as reports of favorable planting conditions in parts of the central U.S. enabled some producers to get an early start on corn seedings.
 
In the U.S. corn belt, scattered areas of light rain are possible into Thursday. Most rainfall amounts will be 0.50 inch or less. Showers and storms should be more widespread with heavier rain this weekend, Global Weather Services said.
 
In CBOT trades, Cargill bought 1,000 May and 600 Jly, FCStone bought 200 May, Fimat bought 500 Dec, Goldenberg Hehmeyer bought 800 Jly and 300 Dec, Man Financial bought 200 May and 200 Dec, Refco bought 200 Dec, and Tenco bought 1,000 Jly, 1,000 Sep and 500 Dec.
 
On the sell side, Merrill Lynch sold 500 May, RJ O'Brien sold 300 Jly, Refco sold 300 Jly and 300 Dec, and Citigroup sold 800 Dec.
 
Commercials were estimated buyers of 5,000 contracts.
 
In spreads, Man Financial spread 2,000 Dec/May, ADM Investor Services spread 2,000 May/Jly and Cargill Investor Services spread 2,000 Dec/May.
 
In options, Citigroup bought 1,000 May $3.10 calls. ADM Investor Services bought 1,200 Jly $2.40 puts, sold 1,000 Jly $3.30 puts and sold 1,000 Dec $3.30 calls.
 
Oat futures ended to the downside, keeping pace with the defensive tone circulating throughout the CBOT grain complex Tuesday.
 
CBOT May oats settled 1 1/4c lower at $1.72 1/2, Jly finished 2 1/4c lower at $1.77 1/2, Sep dropped 3 1/2c lower at $1.82 and Dec ended 2 1/2c lower at $1.86 1/2.