March 6, 2007

 

CBOT Corn Review on Monday: Higher on commercial buys, short covering

 

 

Chicago Board of Trade corn futures ended higher Monday, climbing back from early speculative sales on end-of-day short-covering and commercial buying.

 

March corn ended 6 1/4 cents higher at US$4.17 1/4 per bushel, May corn settled 5 3/4 cents higher at US$4.26 3/4, and December finished 2 cents higher at US$4.08 3/4.

 

The exhaustion of speculative long liquidation pressure opened the door for futures to recover from the early lows, with end-user buying and stability in the U.S. stock market attracting short-covering activity, analysts said.

 

Futures initially stumbled to nearly one-month lows, gapping to the downside on technical charts amid follow-through technical sales and selling tied the defensive influence of outside equity and commodities markets, traders added.

 

Nevertheless, after the selling pressure was absorbed, commercial buying stepped up, and with supportive weekly export inspections, futures were able to find support. U.S. corn inspected for export in the week ended March 1 totaled 51.630 million bushels. The inspections are a 46.9% increase from the previous week's 35.154 million bushels. Analysts surveyed by Dow Jones estimated the inspections would fall within a range of 42 million to 47 million bushels. Accumulated corn inspections for the 2006-07 marketing year total 1.082 billion bushels, up 16.8% from last year's 926.182 million at the same time.

 

Meanwhile, the DTN Meteorlogix Weather forecast said Midwest weather features dominant high pressure, which will produce a much calmer weather pattern across the region through most of this week. Mostly dry conditions are expected across the central U.S. this week. Temperatures will vary, from below normal Monday to normal to above normal by the end of the week. The best chance for light precipitation will be in the Ohio Valley area. Transportation of grain and livestock will be improved with this week's weather pattern, and mild temperatures will melt the heavy snow cover in parts of Iowa and Minnesota, Meteorlogix reports.

 

In pit trades, FCStonnee bought 300 July, JP Morgan bought 2,500 December, and Bunge Chicago, Fimat, Iowa Grain, RJ O'Brien and Rand Financial each bought 500 December.

 

On the sell side, ADM Investor Services sold 1,000 May, Man Financial sold 500 December, FCStonnee and Penson GHCO each sold 400 December, UBS Securities sold 300 May and 300 December. Speculative fund selling was estimated at 3,000 contracts.

 

Day session volume on the e-CBOT platform was 141,246 contracts.

 

CBOT oat futures ended higher across the board, bouncing back from earlier losses on late speculative buys. Spillover support from a recovery in other grains coupled with a lack of follow-through selling pressure rekindled buying interest to lift prices. May oats closed 4 1/4 cents higher at US$2.50 1/4 per bushel and December ended 3 1/4 cents higher at US$2.47 1/2.

 

Ethanol futures ended at steady to higher levels, with the March contract settling 0.025 higher at US$2.320 and the April contract settling unchanged at US$2.200.