February 18, 2006

 

CBOT Corn Review on Friday: Up on spec buys, wheat, soy spillover

 

 

Corn futures on the Chicago Board of Trade ended Friday's session on firm footing, underpinned by speculative buying with borrowed strength from wheat and soybeans aiding price strength.

 

CBOT March corn finished 3 cents higher at US$2.26 1/2, and May ended 3 cents higher at US$2.37 1/4 per bushel. For the week, March corn ended up 5 1/4 cents, and May corn gained 5 1/2 cents over the course of the week.

 

The supportive impact of speculative fund buying lifted futures, as the unwillingness of traders to take on the added risk of stepping in front of the upward tonnee heading into an extended holiday weekend firmly underpinned prices, said a CBOT commission house broker.

 

The firm tonnee was consistent from the outset, with traders saying friendly new-crop supply and demand projections from the U.S. Department of Agriculture's outlook forum and borrowed strength from wheat and soybeans sent positive momentum filtering across the trading floor.

 

The absence of any fresh directive inputs left futures languishing in narrow ranges through midday, before a late barrage of fund buying in other futures filtered into corn to lift prices to new session highs down the stretch, traders added.

 

The active May future climbed to a five-month high, with buying interest accelerating once resistance at last week's high of US$2.36 3/4 was eclipsed. Otherwise, the liquidation and rolling of March positions were featured, as traders positioned themselves heading into Friday's expiration on March options and the Feb. 28 first notice day.

 

Ahead of the open, USDA released its 2006-07 outlook projections. USDA said trend-based 2006 U.S. corn yields are projected at 147.7 bushels per acre, lagging actual 2005 yields of 147.9 bushels per acre. Harvested acreage was put at 73.2 million acres, putting U.S. 2006-07 corn production at 10.810 billion bushels.

 

2006-07 corn ending stocks were seen at 1.726 billion bushels, with total U.S. 2006-07 corn used for feed and residual seen at 5.950 billion bushels while corn used for ethanol fuel was put at 2.150 billion bushels. U.S. 2006-07 corn exports were seen at 2.0 billion bushels.

 

Meanwhile, the DTN Meteorlogix forecast said Argentina's central soybean belt is in the midst of a strong heat wave. Temperatures ranged from the mid-90s to near 100 degrees Fahrenheit Thursday. Over the next five days, more hot and dry weather is in store for this region. Temperatures are likely to top 100 Fahrenheit between Friday and Tuesday. Extended forecast charts point to a chance for showers and thunderstorms during the latter half of next week.

 

In pit trades, ADM Investor Services bought 600 March, Calyon Financial bought 1,500 May, JP Morgan bought 1,000 March, Fimat bought 1,000 July and Tenco bought 400 March. On the sell side, JP Morgan sold 500 May and 600 December, Fimat sold 300 July, and Refco division of Man Financial sold 700 March. Commodity fund buying was estimated near 6,000 contracts.

 

Calyon Financial, Citigroup and Iowa Grain were active spreaders of the March/May spread.

 

Ethanol futures ended lower across the board, with the March future settling 3 cents lower at US$2.47 per gallon.

 

Oat futures finished higher, fueled by speculative buying, with liquidation and rolling of March positions featured attractions. CBOT March oat futures settled 2 1/4 cents higher at US$1.92 and May oats ended 1/2 cent higher at US$1.91 1/2 per bushel.