February 10, 2006

 

CBOT Corn Review on Thursday: Climbs, spec, local buys; export sales

 

 

Corn futures on the Chicago Board of Trade ended firm Thursday, climbing on speculative and local buying with a strong export pace and spillover strength from other grains and oilseeds supporting prices.

 

CBOT March corn finished 4 1/4 cents higher at US$2.25 1/2, and May ended 4 1/4 cents higher at US$2.36 1/4 per bushel.

 

Strong weekly export sales data provided fundamental support for traders to buy into, as recent price gains have not deterred foreign buyers, said a CBOT commission house broker.

 

Analysts say the recent strength in export sales is a reflection of pent up demand spurred on by the recent declines in ocean freight rates. The USDA's 2005-06 marketing year corn weekly export sales were 1,614,000 metric tonnes, 17% above the previous week and 20% over the prior four-week average. Trader expectations ranged from 800,000 to 1,200,000 tonnes.

 

Traders remain leery of stepping in front of speculative buying, with supply and demand data from the U.S. Department of Agriculture deemed a non-event. Analysts said the report did serve as a reminder that there is a lot of corn around to get rid of this year.

 

The focus of the session remained on fund activity, with export sales the icing on the cake to keep buyers in control of price direction. The market held its early lows throughout the day, with scattered speculative fund buying underpinning futures, with local buying generated from spillover strength from other markets, pit sources said.

 

Lingering concerns over dryness in South American growing areas remained supportive features, but the market remains leery of selling amid the potential for commodity fund buying. This was consistent, with commercial selling helping keep a lid on upside momentum. Market technicians said next upside technical objective for the March contract is to challenge resistance the week's high of US$2.27 1/2.

 

Meanwhile, the USDA projected 2005-06 U.S. corn ending stocks at 2.401 million bushels, above the average trade estimate of 2.384 billion, and 287 million bushels larger than the previous year. The decrease in the carryout was attributed to a 25 million bushel increase in corn used for ethanol.

 

In pit trades, ADM Investor Services, Fimat, Rand Financial, Refco and Tenco were key buyers. On the sell side, Cargill, ABN Amro, Calyon Financial, Goldenberg Hehmeyer, and Tenco were active sellers.

 

Fimat spread 2,000 March/May, and FC Stonnee spread 800 March/May.

 

Ethanol futures ended higher across the board, with the March future settling 2 cents higher at US$2.60 per gallon.

 

Oat futures ended on form footing. CBOT March oat futures settled 1 1/2 cents higher at US$1.93 and May oats ended 1 3/4 cents higher at US$1.92 per bushel.