January 11, 2007

 

CBOT Corn Review on Wednesday: Higher on short covering

 

 

Chicago Board of Trade corn futures ended higher Wednesday, recovering from early weakness from index fund and speculative selling, sources said.

 

March corn gained 5 3/4 cents to US$3.60 1/4 per bushel and May corn also rose 5 3/4 cents, to US$3.70 1/4. e-CBOT day session volume in March was 92,757 contracts.

 

The index funds sold corn early and participants followed them, a commission house analyst said. The selling eased and traders covered some of their positions, he added.

 

The market "has been down, down, down and it was due for some consolidation," said Vic Lespinasse of A.G. Edwards & Sons.

 

March corn began the session down over 35 cents from its closing price in 2006.

 

People were also squaring up positions ahead of Friday's USDA reports, the analyst said.

 

In a Dow Jones Newswire survey, the average corn production estimate of 18 analysts was 10.706 billion bushels, 39 million lower than the USDA's estimate of 10.745 billion in November.

 

The average corn yield per acre was 150.8 bushels per acre, slightly lower than the 151.2 estimated in November.

 

The average of 12 analysts polled estimate Dec. 1 quarterly corn stocks at 9.107 billion bushels versus Dec. 2005 estimate of 9.815 billion.

 

The average of 15 analysts surveyed peg corn ending stocks at 893 million bushels, 42 million less than the 935 million estimated in December and the 1.971 billion for the 2005-06 crop.

 

Technically, the market rebounded as March was unable to fill an upside gap below the market and this brought some technical buying in to support prices, a floor trader said.

 

Corn also filled a gap above the market created in Tuesday's trade and traded an outside day, which were also supportive, he added.

 

On open auction technical charts, March corn settled within its recent trading range, below the 50-day moving average but above its 100-day moving average.

 

Buyers Wednesday included FC Stonnee, which bought 600 December; JP Morgan, which bought 500 March; and Tenco, which bought 2,000 March.

 

Fortis sold 4,000 March, Fimat sold 3,000 March, JP Morgan sold 1,000 July, and UBS sold 1,000 March.

 

In spread trading, Advantage bought 6,000 December US$2.60 calls and sold futures against the position, sources said.

 

Oat futures ended modestly lower, unable to bounce higher with corn, a floor analyst said. There was not much of a feature, a floor trader noted.

 

March oats settled 2 1/4 cents lower to US$2.50 per bushel and May fell 2 1/2 cents to US$2.57.

 

Ethanol futures settled lower in thin activity. The February contract lost 13 cents to US$2.039 per gallon, and the March contract, which did not trade, settled 8.5 cents lower at US$1.965.

 

On Thursday, the USDA is scheduled to release the weekly export sales for the week ended Jan. 3 at 8:30 a.m. EST. Analysts expect sales between 500,000-700,000 metric tonnes.