January 26, 2007

 

CBOT Corn Review on Thursday: Bounce higher on speculative, technical buys

 

 

Chicago Board of Trade corn futures ended Thursday's session posting solid gains, fueled by speculative buying in a technical bounce from Wednesday's setback.

 

March corn ended 6 1/4 cents higher at US$4.07 cents per bushel, and December finished 1 1/2 cents higher at US$3.99 1/4.

 

The market experienced two-sided action throughout the day, but the inability of the nearby March contract to uncover a significant selling presence below the US$4.00-per-bushel level continued to promote a bullish atmosphere, said a CBOT commission house broker.

 

The March future briefly dipped below the psychological US$4.00 level, but bounced back as supportive long range supply and demand fundamentals continue to attract speculative buyers, analysts said. Overall activity was relatively thin amid a quiet news front, with technical factors featured. Decent-size commercial selling helped cap upside potential, but traders said market bulls still have the benefit of the doubt, as futures continue to find support beneath the market, a CBOT floor analyst said.

 

Dropping March futures below US$4.00 uncovers buyers who missed out on buying when futures gapped higher in two consecutive days previously, he added.

 

The DTN Meteorlogix Weather Service forecast said next week offers the prospect of some very hot weather developing in Argentina's La Pampa and Buenos Aires provinces, where temperatures may jump to more than 100 degrees Fahrenheit for daytime highs. Ahead of the heat wave, a round of thundershowers promises to bring up to one inch of rainfall to most of the central crop belt. This rain will be critical in allowing crops to ward off stress damage from the oncoming heat wave.

 

Ahead of the open, the U.S. Department of Agriculture said net weekly export sales for corn were 992,900 metric tonnes, down 30% from the prior week and 8% under the prior four-week average. Trade estimates called for commitments in the 800,000 to 1,000,000 tonne range.

 

In pit trades, JP Morgan bought 1,000 December and 300 March, RJ O'Brien bought 400 December, with Fimat and UBS Securities light buyers. Rand Financial sold 500 March and 300 December, Man Financial sold 500 March, with JP Morgan a featured sellers as well. Speculative funds were net buyers on the day.

 

Day session volume on the e-CBOT platform was 139,348 contracts.

 

CBOT oat futures ended higher Thursday, fueled by speculative fund buying, traders said. There was a large fund presence in new crop December contract, with nearby futures benefiting from the speculative gains as well. The rolling of March positions saw increased interest in December, while commercial and farmer selling was seen on the opposite side of the December trades, floor traders said. March oats closed 2 1/2 cents higher at US$2.56 3/4 per bushel and December ended down 3 cents higher at US$2.48.

 

Ethanol futures ended mixed, with the February contract settling .010 higher at US$1.94, and the March contract settled 0.018 lower at US$1.895.