January 9, 2008

 

CBOT Corn Review on Tuesday: Up sharply on speculative buys; fresh highs set

 

 

Chicago Board of Trade corn futures settled sharply higher Tuesday and near new session and life of contract highs set in most months.

 

March corn jumped 12 1/2 cents to 4.78 3/4 per bushel after trading as high as US$4.80, another fresh 12-year high.

 

Corn rallied along with the rest of the commodity world with heavy speculative buying pushing prices higher across a wide range of products, a commission house analyst said. Crude oil, gold, silver and soybeans also scored good gains.

 

Commodity fund buying was estimated at 12,000 contracts in open auction activity.

 

The market rallied "on inflationary type buying," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

In addition, the U.S. Department of Agriculture announced strong corn export sales ahead of the opening providing some fundamental support "right out of the box," said Roose.

 

The USDA announced sales of corn to South Korea, Taiwan and unknown destinations totaling 631,760 metric tonnes for delivery in the 2007-08 marketing year.

 

Corn is still not showing signs of any price rationing of demand, said Roose.

 

Before the opening a drier weather forecast for Argentina also provided support with some forecasters reducing the amount of rain predicted for later in the week. Argentina is a major exporter of corn and the country has experienced dryness in recent weeks, the commission house analyst said.

 

Although market participants expect index funds to buy corn early this year to rebalance their indices, speculative buying was the dominant feature, the commission house analyst said.

 

On daily technical charts, electronically traded March corn remained above its major moving averages with its 14-day relative strength index at 84.89.

 

In options trading, ADM Investor Services bought 1,000 May US$4.50 calls and sold 1,000 July US$4.60 calls. JP Morgan sold 500 March US$4.40 calls and sold 600 July US$4.50 calls.

 

Oat futures ended higher and near new life-of-contract highs set during the session. Light screen-based buying lifted prices higher as oats were influenced by the rally across commodities in general and by corn, a trader said.

 

March oats settled 6 cents higher at US$3.32 1/2 per bushel.

 

Ethanol futures finished higher. February ethanol rose 6.2 cents to US$2.202 per gallon while March gained 7 cents to US$2.14.