January 24, 2007

 

CBOT Corn Review on Tuesday: Up on speculative buys; sluggish selling interest

 

 

Chicago Board of Trade corn futures ended higher Tuesday, underpinned by speculative led buying amid the absence of a significant selling presence in nearby contracts, analysts said.

 

March corn ended 4 3/4 cents higher at US$4.09 cents per bushel, and December finished 6 1/4 cents higher at US$4.02 3/4.

 

The market managed to find its footing after recent consolidative efforts, a CBOT floor analyst said. Anticipation of bullish comments on the future of ethanol production and biofuels in President Bush's state of the union address Tuesday evening held sellers at bay, with buyers remaining optimistic of future corn demand, analysts added.

 

New crop futures were a featured attraction, with the December contract closing in on last week's highs, as long term demand prospects and the need to push prices to levels that will acquire necessary 2007 acreage remained an underpinning draw to speculative buyers.

 

Otherwise, market attention was clearly resting on potential comments from President Bush's speech tonneight, traders said.

 

President Bush's address is shaping up to be the most highly anticipated state of the union speech from the point of grains in history, said Vic Lespinasse, floor analyst with A.G. Edwards and Sons in Chicago.

 

Meanwhile, Joel Kaplan, the White House's Deputy Chief of Staff for Policy, said President George W. Bush will call Tuesday in the state of the union address for the U.S. to reduce its usage of gasoline by 20% in the next 10 years. The target is projected to be reached through two initiatives: boosting the supply of renewable and alternative fuels and reforming fuel efficiency standards for cars, Kaplan told reporters Tuesday.

 

Specifically, the White House will call for an increase in the size and scope of the current renewable fuel standard, or RFS, to require 35 billion gallons of renewable and alternative fuels in 2017. That's nearly five times the current target for 2012, and an amount the White House says will replace 15% of projected yearly gasoline use.

 

The DTN Meteorlogix Weather Service forecasts said the highlight of South America's crop weather situation is a round of very timely rain showers developing in the central Argentina crop belt. Rainfall of close to one inch occurred Monday in La Pampa province in the south, and the entire central crop belt of Buenos Aires, Cordoba and Santa Fe provinces will have rains of up to one inch during this week. This moisture comes on the heels of some hot weather last week, and will be beneficial to both the corn and soybean crops in Argentina.

 

In pit trades, JP Morgan bought 600 July, Citigroup and Fimat each bought 500 July, Goldenberg Hehmeyer, Rosenthal and Shatkin/Arbor each bought 400 December. ADM Investor Services, FCStonnee, Term Commodities and RJ O'Brien were each underlying buyers of December. Speculative funds were estimated buyers of 5,000 contracts.

 

On the sell side, JP Morgan sold 800 December, UBS Securities sold 1,100 December, Tenco sold 500 December, and Rand Financial sold 700 December.

 

CBOT oat futures ended higher across the board, underpinned by spec buys and spillover support from the rest of the grain complex, traders said. March oats closed 1-cent higher at US$2.68 per bushel and May ended down 1/2-cent higher at US$2.74 1/2.

 

Ethanol futures ended higher, with optimistic outlooks for President Bush's speech providing an underlying theme. The February contract settled .020 higher at US$1.89, and the March contract settled 0.021 higher at US$1.878.