January 25, 2008

 

CBOT Corn Review on Thursday: Limit up; speculative buying, outside markets

 

 

Chicago Board of Trade corn futures soared Thursday, finishing at its upper daily trading limits, as the market retraced Wednesday's losses on speculative buying and the supportive influence of outside markets, analysts said.

 

March corn ended 20 cents higher at US$4.89 1/4, May corn settled 20 cents higher at US$5.01 1/4 and December finished 18 1/2 cents higher at US$5.02 1/2.

 

The absence of fresh fundamental news kept traders focused on outside markets, with world equity markets finding their footing, and inflationary markets rallying, futures easily recouped Wednesday's limit-down slide, analysts said.

 

The exhaustion of speculative long liquidation that plagued futures in prior sessions coupled with underlying technical support fed the upward charge, traders said.

 

Meanwhile, outlooks for a potential pickup in export demand amid weakness in the U.S. dollar as well as recent price declines uncovered bargain hunting buying to buoy upside momentum, traders added.

 

Additionally, the upside move was the path of least resistance, with many traders taking a cautious approach as they remain leery of taking on too much risk, waiting to see if the day's recovery is more than a one-day event, a CBOT floor broker said.

 

The DTN Meteorlogix weather forecast said in the central crop areas of Argentina, moisture stress continues in developing corn, soybeans and sunflowers. Some shower activity is possible in western growing areas during the coming weekend, but this is not expected to be a significant system. The five-day period is not very hot, which will reduce stress from dryness. The six- to 10-day period may be hotter but this is a long-range outlook and subject to significant day-to-day changes.

 

In pit trades, FCStonnee bought 300 March, Newedge USA LLC sold 400 March, MF Global sold 300 March, and Rosenthal sold 1,000 July. Speculative fund buying was estimated at 6,000 lots.

 

In demand news, USDA announced Thursday private export sales of 296,000 metric tonnes of corn for delivery to South Korea in the 2007-08 marketing year.

 

On tap for Thursday, USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST. Trade estimates put corn export sales at 1,000,000 to 2,000,000 metric tonnes.

 

Oat futures finished higher on spillover from the sharp gains set in other markets, a trader said. The markets rebounded from steep losses Wednesday, he said.

 

March oats settled 8 1/2 cents higher at US$3.16 1/2 per bushel.