Februday 1, 2006

 

CBOT Corn Review on Tuesday: Up on late buying, spreads, consolidation

 

 

Corn futures traded at the Chicago Board of Trade ended higher Tuesday, with the deferred contracts higher on the rolling out of spot-month March and the nearby supported by light buying interest on the close, sources said. Heavy spread trading was noted with traders estimating 20,000 spreads traded.

 

Activity was two-sided and choppy for much of the session as the market consolidated after recent gains and the lack of fresh news, sources said.

 

March corn settled up 1 cent to $2.18 3/4 per bushel; May corn rose 1 1/4 cents to $2.29; and July gained 1 1/2 cents to $2.38.

 

Position holders were rolling out of March and into the May ahead of next week, bringing pressure on the nearby month, a floor analyst said. In addition, traders bought the deferred months and sold the nearby contracts, he added.

 

It looks like the market got ahead of the "Goldman roll", a floor trader said. The Goldman roll is when the Goldman Sachs Commodity Index, or GSCI, rolls out of positions in the month ahead of the delivery month. Traders had been expecting the rollover to occur next week.

 

The lack of fresh news, with much of Asia closed due to the Lunar New Year holiday limited price volatility, they added.

 

Spillover weakness from wheat and soybeans around midday weighed on corn before light buying interest on the close, thought to be fund-related, helped push most active March to its highs of the session, sources said.

 

Commodity fund buying in corn was estimated at 5,500 contracts.

 

Buyers on Tuesday included Calyon Financial bought 500 March; Fimat bought 1,000 March; Goldenberg-Hehmeyer bought 1,500 March; O'Connor bought 1,000 March; the Refco division of Man Financial bought 1,500 December and 200 March; and Tenco bought 400 July and 400 December.

 

Sellers Tuesday included JP Morgan selling 500 July; O'Connor selling 300 March; and Tenco selling 300 March.

 

In spread trading, May-March traded over 20,000 contracts.

 

Oat futures finished mostly higher in active trading as traders rolled out of some of their March positions into deferred contracts, an oat trader said. The March contract slipped 1 cent to $1.92 per bushel.

 

Ethanol futures settled unchanged to lower with the most active March contract unchanged at $2.41 per gallon.