February 21, 2008

 

CBOT Corn Review on Wednesday: Ends higher on crude oil, short covering

 

 

Chicago Board of Trade corn futures ended at or near session highs Wednesday, rebounding from early weakness set on spillover from lower wheat and soybeans.

 

May corn settled 3 1/2 cents higher at US$5.36 per bushel, and Dec gained 3 cents to US$5.48.

 

Corn closely followed the direction of crude oil and when crude oil turned positive, the market moved higher, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Nearby crude oil was up 92 cents at US$100.93 per barrel when corn closed.

 

"Demand for corn continues to be strong and higher crude oil prices increases demand for corn via its ethanol component," said Roose.

 

Short covering also added to the firm tonnee near the close, an analyst said. "It was a simple case of short position holders covering, unwilling to carry their positions overnight," said Joe Bedore, floor manager at FC Stonnee.

 

News that Smithfield Foods would liquidate its breeding herd by 4% to 5% or 40,000 to 50,000 sows because of rising grain costs, didn't have much impact in Wednesdaycs session, despite its bearish demand implications, said Roose.

 

On daily open auction technical charts, when open auction March held support near the US$5.14 level it encouraged buying interest and corn began to rebound, a market technician said. March settled at a new high close.

 

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

 

Price direction Thursday will depend on the outside markets and what happens at the U.S. Department of Agriculture's Outlook Forum, an analyst said.

 

In options trading, Tenco sold 10,000 May US$5.50 calls and Newedge sold 1,000 March US$5.70 calls.

 

Oat futures finished higher with December making another new all-time high as light speculative and commercial buying supported prices, an analyst said.

 

December oats traded as high as US$4.08 1/4 per bushel.

 

March oats rose 7 cents to US$3.75 per bushel and December settled up 5 1/4 cents to US$4.08.

 

Ethanol futures settled mixed. March ethanol slipped 1.3 cents to US$2.29 per gallon and April rose 1.8 cents to US$2.297.