February 29, 2008

 

CBOT Corn Review on Thursday: Speculative buys propel prices to record highs

 

 

Chicago Board of Trade corn futures ended sharply higher Thursday, leaping to post new record highs as speculative buying reenergized bullish momentum.

 

March corn ended 18 1/4 cents higher at US$5.43 1/4, May corn settled 18 cents higher at US$5.56 1/4 and December finished 12 cents higher at US$5.65 1/2.

 

Corn futures continue to lag behind other markets amid a lack of fresh fundamental directives, but with huge speculative money flows circulating into commodities, corn garnered its share on perceptions its price was cheap in relation to rallies in soybeans and wheat, analysts said.

 

"Money flow was the key, with the move in soybeans reawakening the bull in corn," a CBOT analyst said.

 

The unwinding of wheat/corn spreads, broad based buying in commodities with a weak U.S. dollar, and record high metal and energy prices attracting inflationary buying, analysts added.

 

Nevertheless, prospects for a tightening balance sheet long-range continue to limit downside moves, but the market needs to draw off momentum in other areas to illicit the buying interest seen in soybeans amid the absence of a tight nearby stock scenario, an analyst added.

 

Meanwhile, weakening cash basis levels coinciding with ample cash corn stocks in the pipeline - and grain elevators worrying over credit issues - is seen producing moderate to large deliveries against March corn futures.

 

Analysts expect deliveries against the CBOT March corn contract to fall in a range of zero to upwards of 4,000 lots, with many analysts leaning toward a figure in the 500 to 2,000 lot range.

 

First notice day for the March future is Friday.

 

The DTN Meteorlogix weather forecast said showers, some locally heavy, will be scattered across Argentina's crop areas. Cordoba, Santa Fe and northern Buenos Aires got up to an inch and a quarter during the past 24 hours. That is a boost to maturing crops and soil moisture. La Pampa and southern Buenos Aires got a little less rain, about an inch.

 

The next couple days, through the weekend, likely will see only scattered showers, and mostly in eastern areas. Western areas are expected to remain dry.

 

In pit trades, speculative fund buying was estimated at 8,000 lots.

 

CBOT oat futures closed higher on borrowed strength from sharp rallies in the neighboring corn and soybean markets, a floor trader said. Fund buying also boosted prices, he said. March oats rose 2 cents to US$4.14 1/2 per bushel, and May oats jumped 2 1/2 cents to US$4.27 1/2.

 

Ethanol futures were firmer at the close. March ethanol was 3.9 cents higher at US$2.359 per gallon, and April ethanol was up 6 cents at US$2.34.