January 11, 2006

 

CBOT Corn Review on Tuesday: Higher on late fund buying

 

 

Corn futures traded at the Chicago Board of Trade ended Tuesday with modest gains, bolstered by a late round of fund buying, sources said.

 

March corn gained 2 1/4 cents to US$2.13 1/4 per bushel, May corn rose 2 cents to US$2.22 1/2, and July corn added on 1 1/2 cents to US$2.30 1/2 per bushel.

 

Corn traded on both sides of Monday's settlement prices for much of the session as most traders were cautious about putting positions on ahead of Thursday's U.S. Department of Agriculture crop production, grain stocks and supply/demand data, a floor trader said.

 

Late in the session however, a flurry of commodity fund buying, thought to be index funds, which tend to be passive investors, helped push prices from near unchanged levels to their highs of the day.

 

The index funds came in and bought it late, that's the reason for the gains, the trader said.

 

Forecasts for rain over the next several days in Argentina limited buying interest for most of the day as the wetter forecast is expected to help the crop recover from extremely hot and dry conditions in corn growing regions of the country, a floor analyst said.

 

DTN Meteorlogix weather forecast a much improved weather outlook for corn growing areas in Argentina with widespread rainfall of more than 2 inches expected by the end of the upcoming weekend.

 

In a survey conducted by Dow Jones Newswires, the average of estimates from 17 analysts project 2005-06 corn output at 11.068 billion bushels, with a yield of 148.9 bushels per acre, the second-biggest crop on record.

 

In November, USDA projected U.S. corn production at 11.032 billion bushels with a yield of 148.4 bushels.

 

The average of 12 analysts surveyed by Dow Jones Newswires forecast quarterly grain stocks as of Dec. 1 at 9.775 billion bushels as compared to 9.451 billion as of Dec. 1 2004.

 

The average of 13 analysts surveyed by Dow Jones forecast 2005-06 ending stocks at an average of 2.389 billion bushels, below the 2.419 billion forecast by the USDA in December.

 

The USDA is scheduled to release the report Thursday at 7:30 a.m. CST (1330 GMT).

 

Buyers on Tuesday included Fimat, which bought 2,000 March, O'Connor bought 1,500 March, Goldenberg-Hehmeyer bought 400 March, Merrill Lynch bought 300 March and Tenco bought 200 July.

 

Sellers Tuesday included R.J. O'Brien, which sold 1,000 March and the Refco division of Man Financial, which sold 300 March and 400 July.

 

Oat futures recovered from Monday's losses and ended higher, with the March contract settling up 3/4 cent at US$1.86 per bushel.

 

Ethanol futures ended modestly higher. The most-active April contract settled 2 cents higher at US$2.18 per gallon.