February 9, 2007

 

CBOT Corn Review on Thursday: Up on technicals, short-covering bounce

 

 

Chicago Board of Trade corn futures ended higher across the board Thursday, rallying on a technically inspired short-covering bounce from recent declines.

 

March corn ended 7 1/2 cents higher at US$3.99 3/4 per bushel, and December finished 5 1/2 cents higher at US$3.96 1/2.

 

The market has been a bit oversold of late, and with many people wanting to stay out of the way of index fund rolling Wednesday, short-covering needs were pushed back to Thursday's session, said Shawn McCambridge, senior analyst with Prudential Financial in Chicago.

 

Technical buying was a feature as well, with the inability of the market to breach Wednesday's lows uncovering fresh buying and short covering to firmly plant prices in positive territory, traders said. The early failure of prices to test Wednesday's lows uncovered pre-placed commercial bids, which kick-started the upward push, traders added.

 

The absence of fresh fundamental directives left traders questioning the session's strength, with most of the gains attributed to a general exhaustion of selling, analysts said. Otherwise, the rolling of spreads and position squaring ahead of Friday's supply and demand report were underpinning themes.

 

Looking ahead, traders anticipate futures will remain range-bound, with grinding lower the theme unless fresh news or a bullish surprise emerges in Friday's reports. Analysts anticipate the U.S. Department of Agriculture will make only minor, if any, adjustments in its supply/demand report according to industry participants surveyed by Dow Jones. The USDA's report is scheduled for release at 8:30 a.m. EST (1330 GMT) Friday.

 

The average of analysts' estimates surveyed by Dow Jones expects U.S. ending stocks to come in 10 million bushels higher than the previous month at 762 million bushels. The range of analysts' estimates span from 702 million bushels to 852 million bushels.

 

Meanwhile, USDA said net weekly export sales for corn were 917,300 tonnes. Trade estimates called for commitments in the 700,000- to 1,000,000-tonne range.

 

The Canadian Food Inspection Agency has confirmed the diagnosis of bovine spongiform encephalopathy, also known as mad-cow disease, in a mature bull from Alberta, a release from the CFIA said late Wednesday evening. Analysts said the report did not have an impact of grain futures, as the market's underlying fundamentals overshadow the impact of the news.

 

In pit trades, Fimat bought 1,000 March, JP Morgan bought 500 May and 500 July, ADM Investor Services and Man Financial each bought 300 December. Rosenthal bought 500 December. Speculative fund buying was estimated between 5,000 and 6,000 contracts.

 

On the sell side, JP Morgan sold 500 March and 700 December. In spreads, JP Morgan spread 2,000 May/March and Calyon Financial spread 1,000 May/March.

 

Day session volume on the e-CBOT platform was 138,344 contracts.

 

CBOT oat futures ended near unchanged levels Thursday. The absence of fresh news kept the recent theme of speculative liquidation in March futures and fund buying of new-crop contracts intact, with commercial hedging reported in new-crop December as well. March oats closed unchanged at US$2.50 per bushel and December ended 1/4 cent higher at US$2.49 1/2.

 

Ethanol futures ended mixed, with the March contract settling 0.030 lower at US$2.025, and the April contract settling 0.008 higher at US$2.018.