February 23, 2007

 

CBOT Corn Review on Thursday: Rallies to new highs on speculative buying

 

 

Chicago Board of Trade corn futures ended higher Thursday, with new life-of-contract highs set across the board and prices again trading at their highest levels in more than 10 years as a combination of fund and technical buying pushed prices higher, sources said.

 

March corn settled 8 1/4 cents higher at US$4.34 1/2 per bushel and May jumped 8 1/2 cents to US$4.47 1/2.

 

"Corn is benefiting from the continued speculative interest in commodities," said Vic Lespinasse of AG Edwards & Sons.

 

New life-of-contract highs were set from the March 2007 through December 2008 contracts.

 

Overall commodity fund buying was estimated at 10,000 contracts.

 

Speculative money continues to flow into agricultural commodities as the market is concerned about the ability to produce enough corn this year to meet the expected demand, a commission house analyst said.

 

Adding background support were crude oil futures as nearby crude remained over US$60 per barrel, the analyst added.

 

On day-session technical charts, May corn remained above its major moving averages and is up over 27 cents from last Thursday's close.

 

Buyers on Thursday included ADM, which bought 500 December; Fortis, which bought 600 May; and Rand, which bought 300 May.

 

Sellers included JP Morgan, which sold 400 December; and Rand, which sold 700 December.

 

In options trading, Tenco bought 10,000 December US$5.00 calls and sold 5,000 December US$4.20 calls.

 

Corn is overbought but it could trade higher Friday depending upon what the speculative money wants to do, a floor trader added.

 

Oat futures ended at or near session highs as spillover from corn and wheat futures pushed prices higher, sources said.

 

Concerns about the impact of a rail strike in Canada impacting oat supplies also provided support, a commission house analyst said.

 

March oats rallied 6 cents to US$2.57 per bushel and May settled 6 1/2 cents higher to US$2.63 3/4.

 

Ethanol futures ended higher in modest trade. The March contract rose 5.5 cents to US$2.163 per gallon. The April contract settled 6.2 cents higher to US$2.11 per gallon.

 

On Friday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report for the week ended Feb. 15. Analysts estimate sales between 800,000-1.1 million metric tonnes. Sales for the week ended Feb. 8 were 1.39 million tonnes.