January 5, 2008

 

CBOT Corn Review on Friday: Modestly higher in two-sided trade

 

 

Chicago Board of Trade corn futures ended slightly higher Friday and within narrow price ranges as participants consolidated positions ahead of the weekend, an analyst said.

 

March corn settled 3/4 cent higher at US$4.66 3/4 per bushel.

 

The upside was limited as spot month March could not pierce technical resistance near the US$4.70 level, the analyst said.

 

Spillover weakness from lower wheat and soybean values also limited buying interest early as did a sharp sell-off in crude oil futures, a commission house analyst said.

 

One trader noted the poor economic reports released Friday also kept buying interest light on concerns that any possible recession would dampen demand for commodities.

 

Talk that commodity index funds would be rebalancing their portfolios next week to include more corn dampened aggressive selling interest as did next week's crop production, stocks and supply/demand reports, due Friday, the commission house analyst said.

 

Considering the losses across commodities and equities, corn had "a pretty good showing," said Bill Nelson, associate vice president at AG Edwards & Sons. The recent energy bill passed by Congress underscores the need to plant a lot of corn acreage this year, given the greater domestic demand for ethanol, said Nelson.

 

A rebound in both wheat and soybean prices near the close also provided mild support for corn, a broker said.

 

Weaker-than-expected weekly export sales had little impact as the reporting period included the Christmas holiday, the commission house analyst said. The U.S. Department of Agriculture reported weekly corn export sales were 688,500 metric tonnes for the week ended Dec. 27, 51% below the prior week and under the 800,000 to 1.3 million tonnes expected by analysts.

 

In open auction trading commodity fund buying was estimated at 2,000 contracts.

 

On daily technical charts, electronically traded March corn remained above its major moving averages with its 14-day Relative Strength Index at 81.67.

 

In options trading, JP Morgan sold 2,000 March US$4.40 calls and Bunge-Chicago bought 1,000 May US$4.00 puts.

 

Oat futures ended higher after a volatile, two-sided session, a trader said. The funds were buyers but commercial firms were noted sellers, the trader said.

 

March oats matched their life-of-contract high of US$3.30 per bushel set Thursday and settled 4 1/4 cents higher at US$3.29 3/4.

 

Ethanol futures settled mostly lower. January ethanol fell 5.5 cents to US$2.30 per gallon while February declined 6.6 cents to US$2.21.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the weekly commitments of traders report.