March 1, 2007

 

CBOT Corn Review on Wednesday: Bounced higher on speculative led buying

 

 

Chicago Board of Trade corn futures ended higher Wednesday, bouncing back from Tuesday's sell-off on speculative led buying.

 

March corn ended 14 1/4 cents higher at US$4.25 1/4 per bushel, May corn settled 11 1/4 cents higher at US$4.35 1/2, and December finished 10 1/2 cents higher at US$4.20.

 

The market encountered consolidative trade, back filling Tuesday's sharp declines amid the lack of aggressive speculative sales and the absence of any unusual activity in outside markets, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

The market recouped most of Tuesday's losses, as the uncertainties of acreage and weather coupled with bullish underlying fundamental outlooks rekindled buying after Tuesday's flush out of speculative longs, analysts added.

 

The overall theme was consistent, with prices accelerating to session highs down the stretch on late short covering, and speculative bargain hunting ahead of the U.S. Department of Agriculture's annual outlook conference, traders added.

 

Analysts expect the USDA will only modestly adjust the 2007-08 corn balance sheet projections when the government releases its updated baseline projections at its annual outlook conference. The USDA's outlook conference is scheduled for Thursday and Friday, with the department's baseline projections released Friday.

 

Otherwise, traders squared up positions in the nearby March future, with the correction of the intermarket March/May spread featured amid lighter than expected deliveries, traders added.

 

The DTN Meteorlogix Weather forecast said the primary crop areas of the U.S. have transportation delays in store due to a strong winter storm pattern moving from the Plains into the Midwest Wednesday through Friday. A combination of ice and snow is headed for the Northern Plains and northern Midwest. Snowfall may reach close to a foot in northern Iowa and Minnesota. Melted precipitation in the northern Midwest will total up to one and one-quarter inch.

 

Southern Iowa through the mid-Mississippi and Ohio valley areas will have rainfall of up to one inch. However, frozen ground will inhibit much percolation of this moisture into the topsoil and subsoil, Meteorlogix reported.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its weekly export sales report 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires expect corn commitments to fall within a range of 600,000 to 800,000 metric tonnes.

 

In pit trades, speculative fund buying was estimated near 4,000 contracts. Buyers and sellers were wisely scattered among various commission houses.

 

Day session volume on the e-CBOT platform was 114,806 contracts.

 

CBOT oat futures ended higher across the board, displaying recovery strength in unison with advances in other grains. Technical and speculative buying underpinned futures, with traders finding support amid the absence of carryover selling from Tuesday, analysts said. May oats closed 3 3/4 cents higher at US$2.53 per bushel and December ended 2 cents higher at US$2.50.

 

Ethanol futures ended mixed, with the March contract settling 0.002 lower at US$2.258, and the April contract settling 0.020 higher at US$2.180.