January 18, 2007

 

CBOT Corn Review on Wednesday: Ends higher but late selling cuts gains

 

 

Chicago Board of Trade corn futures ended modestly higher Wednesday, but well off of new all-time and life-of-contract highs set earlier in some months, as corn was unable to sustain its early gains.

 

March corn settled 5 cents higher to US$4.08 per bushel and May corn rose 5 1/4 cents to US$4.19. e-CBOT day session volume in March was 93,050 contracts.

 

Fund selling late in the session, some of it thought to be index fund reallocation, trimmed the strong advances, as did profit taking, sources said.

 

The index funds sold it late in an effort to rebalance their holdings, a floor trader said.

 

Earlier, corn rallied to set new contract highs in the nearby months and another all-time high in the March contract as speculative fund buying helped boost prices, sources said.

 

Overall fund buying was estimated at 10,000 contracts.

 

"Corn continues to build on the bullish sentiment from Friday's USDA reports," said Shawn McCambridge, senior grain analyst at Prudential Financial.

 

The market tried to breach Tuesday's low in overnight trade but couldn't break it and the market rebounded, helping set the tonnee for the day session. Buying wasn't aggressive but steady for most of the day, he added.

 

March didn't close very well, but all things considered compared to where it was last week it continues to look like it will remain strong, a floor trader said.

 

On day session technical charts, March corn reached another new all-time high, reaching US$4.20 1/2. March remains above its major moving averages and its 14-day relative strength index stands at 66.68.

 

One week ago, the 14-day RSI in March was 42.25

 

Buyers on Wednesday included Man Financial, which bought 2,000 December, Calyon, which bought 1,000 March, Fortis, which bought 1,000 March and FC Stonnee, which bought 800 December.

 

Sellers Wednesday included Fimat which sold 7,000 March, Fortis, which sold 4,000 March, J Morgan, which sold 2,000 March and Calyon, which sold 2,000 March.

 

In options trading Advantage bought 5,000 Feb. US$3.80 puts, 5,000 Feb. US$3.75 calls, 5,000 Feb. US$3.75 puts and 6,000 March US$3.90 calls. Fortis bought 5,000 March US$3.30 calls and sold 5,000 March US$3.70 calls.

 

Oat futures settled modestly higher, supported by spillover from stronger wheat and corn futures as well as light fund and commercial buying of the new crop contracts, a commission house analyst said.

 

March oats gained 2 cents to US$2.71 per bushel and May also rose 2 cents to US$2.77.

 

Ethanol futures ended lower. The February contract did not trade and fell 5.1 cents US$1.939 per gallon. The March contract, which also did not trade, settled 10 cents lower at US$1.83.