January 12, 2006

 

CBOT Corn Review on Wednesday: Modest gains ahead of USDA reports

 

 

Corn futures at the Chicago Board of Trade finished higher Wednesday, bolstered by light fund buying and position squaring ahead of Thursday's U.S. Department of Agriculture production, stocks and supply/demand reports, floor traders said.

 

March corn settled 1 1/4 cents higher at US$2.14 1/2 per bushel, May corn gained 1 1/2 cents to US$2.24, and July corn rose 1 3/4 cents to US$2.32 1/4 per bushel.

 

Trading was choppy and confined to relatively narrow ranges for with market participants reluctant to enter into positions, sources said.

 

Sellers were reluctant to sell given the recent fund buying interest and buyers were on the sidelines ahead of the USDA report, said Shawn McCambridge, senior grain analyst with Prudential Financial in Chicago.

 

On Thursday, the USDA is scheduled to release its crop production, quarterly grain stocks and supply/demand tables at 7:30 a.m. CST (1330 GMT). The weekly export sales report for the week ended Jan. 4 is also scheduled for release, with analysts expecting export sales between 550,000-750,000 metric tonnes.

 

The average of estimates from 17 analysts surveyed by Dow Jones Newswires 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 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.

 

Buying interest was also limited by rainfall overnight in parts of Argentina and forecasts for additional precipitation over the next several days after a period of extremely hot and dry conditions in corn-producing regions of the country, traders said.

 

Argentina is a major competitor to the U.S. in world export markets.

 

Buyers on Wednesday included O'Connor, which bought 1,000 March. JP Morgan bought 600 March, Iowa Grain bought 700 March, UBS bought 500 March, Tenco bought 300 May and Term bought 200 March.

 

Sellers Wednesday included ABN Amro, which sold 800 March. O'Connor sold 500 March, Goldenberg-Hehmeyer sold 300 March, Fimat sold 200 March, Rand Financial sold 200 March and ADM sold 100 March.

 

Commodity fund buying was estimated at 1,800 contracts.

 

Oat futures settled mostly higher with the March contract ending up 2 3/4 cents at US$1.88 3/4 cents per bushel.

 

Ethanol futures finished unchanged to higher. The most-active April contract ended unchanged at US$2.18 per gallon.