March 3, 2006

 

CBOT Corn Review on Thursday: Ends firm on limited selling, spec buys

 

 

Chicago Board of Trade corn futures ended firmly Thursday, effectively recouping Wednesday's losses on speculative and local buying amid the absence of significant selling pressure.

 

CBOT March corn finished 4 1/4 cents higher at US$2.28 1/2, and May ended 4 1/2 cents higher at US$2.39 1/4 per bushel.

 

The market corrected Wednesday's price correction, dominated by speculative buying as the inability of futures to generate follow-through selling after sliding to one-week lows early on rekindled buying interest, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Spillover momentum from soybeans and wheat helped kick-start the upward tonnee, with advances accelerating once the active May contract pushed through overhead technical resistance. The May future ended on its highs, matching a six-month high set Tuesday.

 

Futures initially drifted lower, under pressure from lower-than-expected weekly export sales with bird flu concerns an underlying issue. However, when selling pressure quickly exhausted, futures reversed course, sending sellers running for cover amid fears that fund buying would emerge on the price break, added McCambridge.

 

This continued, with borrowed strength from neighboring wheat and soybeans injecting momentum to keep buyers in control of price direction. Traders said the day's strength was the effect of a lack of selling in nearby contracts, as there is not any fundamental connection to which to tie the gains.

 

Meanwhile, the U.S. Department of Agriculture said 2005-06 corn weekly export sales totaled 613,500 metric tonnes, 58% below the previous week and prior four-week average. Trader expectations ranged from 800,000 to 1,200,000 tonnes.

 

DTN Meteorlogix said Argentina will have scattered showers over the next three days. There will be enough rain in northern Brazil to pose some harvest delays.

 

In pit trades, ABN Amro bought 1,200 May, Fimat bought 1,500 May, Man Financial bought 1,000 May, Refco bought 2,000 May, Calyon Financial, JP Morgan and Goldenberg Hehmeyer each bought 500 May. Commodity funds were estimated buyers of 5,000 contracts.

 

On the sell side, JP Morgan sold 1,000 May, ABN Amro sold 900 May, Fimat sold 700 May and Refco division of Man Financial sold 2,500 May. In spreads, O'Connor spread 2,000 Jly/May, Tenco spread 1,000 May/July and 600 May/March, and JP Morgan spread 700 March/May.

 

Ethanol futures ended lower across the board, with the March future settling 1 cent lower at US$2.42 and April ethanol ended 3 1/2 cents lower at US$2.38 1/2 per gallon.

 

Oat futures finished higher Thursday, bouncing back from Wednesday's setback in step with the rest of CBOT grain complex. CBOT March oat futures settled 3 cents higher at US$1.82 1/2 and May oats ended 2 1/4 cents higher at US$1.88 1/2 per bushel.