February 17, 2006

 

CBOT Corn Review on Thursday: Ends up; wheat, exports support

 

 

Corn futures on the Chicago Board of Trade settled higher Thursday, underpinned by spillover strength from wheat and supportive export data, traders said.

 

CBOT March corn finished 1 1/2 cent higher at US$2.23 1/2, and May ended 2 cents higher at US$2.34 1/4 per bushel.

 

Another week of export sales over 1.2 million tonnes, a rally in wheat futures and supportive reports from the U.S. Department of Agriculture's Outlook Forum provided strength to underpin prices, said Bill Nelson, associate vice president, A.G. Edwards and Sons in St. Louis.

 

Overall volume was thin, with futures embarking on a two-sided path in early action. However, as the session unfolded, the market gained its footing, with a rally in wheat futures filtering over to generate buying interest.

 

This was consistent, with demand in the export sector providing underlying strength and comments from the USDA outlook conference enabling prices to hold firm.

 

Demand remains an underlying driver of futures, and with export sales consistently above 1 million tonnes during the past four weeks, it supports talk that the USDA may raise its export projection in futures supply and demand reports, added Nelson.

 

USDA said 2005-06 corn weekly export sales totaled 1,197,300 metric tonnes, and 2006-07 marketing year sales were 52,500 metric tonnes. Trader expectations ranged from 1,000,000 to 1,200,000 tonnes.

 

In addition, USDA said private exporters reported the sale of 126,000 metric tonnes of U.S. corn to the Dominican Republic.

 

Meanwhile, U.S. farmers are expected to plant 1.3 million fewer acres to corn this spring, bringing the 2006-07 total plantings to 80.5 million acres, USDA said at its outlook forum. USDA's forecast of a 10%-15% gain in corn prices in 2006-07 attributed to stronger demand for ethanol and forecasts for lower acres.

 

The DTN Meteorlogix forecast said Argentina has a hot and dry weather pattern ahead during the next week. Temperatures will be well into the 90s Fahrenheit for high temperatures. Southern Brazil will not be as hot as Argentina, but rain fall will be very scattered in this area as well during the next five to seven days.

 

In pit trades, ABN Amro, JP Morgan, RJ O'Brien and Rand Financial were featured buyers. On the sell side, ABN Amro, Calyon Financial, Fimat, Man Financial, Tenco and UBS Securities were key sellers.

 

Ethanol futures ended lower, with the March future settling 8 cents lower at US$2.50 per gallon.

 

Oat futures ended lower across the board, bucking the trend in the CBOT complex, with the liquidation of March positions ahead of first notice day featured. CBOT March oat futures settled 2 1/4 cents lower at US$1.89 3/4 and May oats ended 3/4 cent lower at US$1.91 per bushel.