January 15, 2008

 

CBOT Corn Review on Monday: Sharply higher on follow through, speculative buying

 

 

Chicago Board of Trade corn futures ended sharply higher Monday, boosted by spillover buying from Friday's limit up close and speculative buying.

 

March corn settled 17 cents higher at US$5.12 per bushel after trading to a new 12-year high of US$5.15. New crop December settled 17 1/4 cents higher at US$5.30 1/2.

 

Follow-through buying from Friday and the overnight trade, a weaker dollar and fund buying helped push corn higher, said Dale Durchholz, an analyst at AgriVisor, in Bloomingtom, Ill.

 

In addition, speculative buying added to the gains with commodity fund buying estimated at 4,000 contracts in open auction activity.

 

A pullback from higher levels in nearby soybeans and wheat and a sell-off in soybean meal from early strong gains helped corn slip from its limit-up gains, a trader said. Light profit-taking after the sharp rally corn has experienced also added to the modest pressure, the trader added.

 

Stronger crude oil and precious metals prices also added to the gains, the trader noted. Crude oil was over US$1 per barrel higher when corn closed and nearby gold ended above the US$900 per ounce level.

 

News before the opening that South Korea purchased 116,000 metric tonnes of U.S. corn for delivery in 2007-08 and better-than-expected export inspections also added to the strength as it seems that high corn prices don't appear to be impacting demand, a commission house analyst said. Export inspections were 50.5 million bushels for the week ended Jan 10, well above the 32 million-37 million expected by analysts.

 

Speculative money flows will dictate what corn does Tuesday, an analyst said. If the speculative interests continue to buy, corn will be higher, the analyst said.

 

On daily technical charts, open auction March corn gapped open higher for the second straight session with the 14-day relative strength index in March at 88.20.

 

In options trading, Rosenthal bought 2,000 December US$5 calls and MF Global sold 3,000 July US$6 calls.

 

Oat futures ended lower, despite making new-life-of contract highs as early spillover support from corn faded and light commercial selling pressed the market in thin trade, an analyst said.

 

March oats, which traded as high as US$3.43, fell 5 1/2 cents to US$3.30 1/2.

 

Ethanol futures finished higher. February ethanol closed up 6 cents to US$2.27 per gallon while March closed 8 1/2 cents higher to US$2.23.