February 1, 2008

 

CBOT Corn Review on Thursday: Settles firm on spillover, strong equities

 

 

Chicago Board of Trade corn futures finished higher Thursday, shrugging off earlier losses as spillover from wheat futures and stronger outside markets underpinned prices in two-sided trade, an analyst said.

 

March corn gained 2 3/4 cents to US$5.01 1/4 per bushel, and December settled 5 3/4 cents higher at US$5.15 3/4.

 

The combination of a sharply-lower stock market, crude oil declines and sliding wheat futures combined to press corn lower near the opening, a commission house analyst said. However, corn trimmed its losses near mid-day as equity markets turned higher, wheat prices rebounded and crude oil slashed most of its earlier losses, the analyst said.

 

The DJIA, which was down nearly 200 points when the grain markets opened, was trading well over 100 points higher when corn trading ended. Nearby crude oil futures traded as low as US$89.58 per barrel before settling at US$91.75, down 58 cents. MGE March spring wheat futures settled limit up, 30 cents higher at US$13.73 per bushel, the highest price ever recorded for a wheat futures contract.

 

Bear market spreading added to the strength in new crop months with light speculative buying, thought to be commodity funds, adding to the gains, a trader said.

 

In open auction trading, commodity fund buying was estimated at 4,000 contracts.

 

Light month end position-squaring helped cap the upside near the close, the trader added.

 

A better-than-expected weekly export sales report released ahead of the opening did not have much impact as participants "sold the fact" of the strong sales early, a trader said.

 

The U.S. Department of Agriculture reported that corn export sales for the week ended Jan. 24 totaled 1.891 million metric tonnes, well above the 900,000-to-1.5 million tonnes expected by analysts. Included in the total were sales of 3,400 tonnes for delivery in the 2008-09 marketing year. South Korea and Japan accounted for over half of the total.

 

Market direction on Friday will key off of what happens to equities, wheat prices and updated weather forecasts for South America, an electronic trader said.

 

In options trading, MF Global sold 1,000 December US$5.20 calls and sold 1,000 December US$5.00 puts.

 

In open auction trading, commodity fund buying was estimated at 4,000 contracts.

 

Oat futures settled moderately higher and near session highs, boosted by spillover from the rest of the grains and light fund buying, an analyst said.

 

March oats settled 6 1/4 cents higher to US$3.29 1/4 per bushel.

 

Ethanol futures settled lower. February ethanol fell 4 cents to US$2.155 per gallon while March fell 0.008 cent lower at US$2.10.