February 22, 2007

 

CBOT Corn Review on Wednesday: Rallies to 10-year highs on spec-buying push

 

 

Chicago Board of Trade corn futures ended on firm footing Wednesday, jumping to 10-year highs as bullish market sentiment attracted speculative buyers.

 

March corn ended 11 cents higher at US$4.26 1/4 per bushel, May corn settled higher 10 3/4 cents higher at US$4.39, and December finished 9 3/4 cents higher at US$4.23.

 

The speculative sector just doesn't want to be short heading toward the spring planting season, as the need for ideal weather conditions to produce record crop production in 2007 is keeping buyers in control of direction, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Traders said midday weather forecasts from Cropcast Weather Services, pointing to a La Nina weather pattern forming, added to the bullish theme. The result of the pattern would cause wet spring conditions in the eastern corn belt, particularly in the Ohio River Valley, according to the forecast.

 

This could spell planting delays for corn in the area and that is not something the market wants to hear when ideal planting and growing conditions are needed to produce record crops in 2007, said Vic Lespinasse, analyst with A.G. Edwards and Sons in Chicago.

 

Broad-based commodity-wide strength added fuel to the fire, with technical strength another feature that led corn to new contract highs, traders said. The inability of the market to press futures lower on opening weakness was a signal to sellers to get out the way, as market sentiment is not in the favor of market shorts at this point, a CBOT floor analyst said.

 

Meanwhile, the DTN Meteorlogix Weather forecast said temperatures in the Midwest are averaging above normal, which is expected to continue through the end of the week. The region has been mostly dry, with rain of half an inch or less in eastern areas, but that is expected to change by the weekend. Light precipitation will fall in the East through Friday, and will pick up into Saturday.

 

Western Midwest areas will get some rain possibly changing to snow by Saturday night. The warmer temperatures will be good for river traffic, which has recently been idled with barges frozen into a standstill, Meteorlogix reports.

 

In pit trades, ADM Investor Services bought 500 March and 500 December, Fimat bought 500 May and 2,000 December, Iowa Grain bought 500 May and 1,700 July, RJ O'Brien bought 700 December and Rand Financial bought 500 December, with UBS Securities buyers of 500 May, 1,500 July and 1,000 December. Speculative fund buying was estimated at 12,000 contracts.

 

On the sell side, JP Morgan sold 1,000 December, Fortis sold 900 March, and UBS Securities sold 400 March and 2,000 December. In spreads, Fimat spread 5,000 March/May and spread 2,000 May/March.

 

Day session volume on the e-CBOT platform was 171,800 contracts.

 

CBOT oat futures ended higher, with nearby contracts up sharply on speculative fund buying amid the supportive influences of broad-based commodity strength. March oats closed 9 1/2 cents higher at US$2.51 per bushel and December ended 1-cent higher at US$2.49.

 

Ethanol futures ended Wednesday's session mixed, with the March contract settling 0.015 higher at US$2.108 and the April contract settling 0.002 lower at US$2.048.