March 10, 2006

 

CBOT Corn Review on Thursday: Ends up; bouncing back from prior losses

 

 

Chicago Board of Trade corn futures ended firm Thursday, finishing at session highs, as the market staged a modest recovery from losses incurred over the past three days.

 

CBOT March corn settled 4 1/4 cents higher at US$2.23 1/4, and May corn ended 4 cents higher at US$2.32.

 

The market had exhausted selling interest short term, opening the door for a light bounce as sellers remain reluctant to aggressively press prices below the US$2.30 per bushel level basis May futures, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Futures lacked price-moving factors to extend the recent declines, with strength in outside markets and supportive weekly export sales helping to hold futures in positive territory.

 

Activity slowed in midday action, with pre-crop report positioning keeping prices range bound amid a general consensus among analysts calling for increased export demand and tighter ending stocks projections in the U.S. Department of Agriculture's supply-and-demand report.

 

This continued until a late burst of speculative and local buying surfaced to push futures to their highs heading into the stretch, traders added.

 

Meanwhile, Midwest weather forecasts and abundant supplies remain bearish features, but traders said the influences had been adequately factored into prices during the market's three-day slide.

 

Futures are poised for a continuation of range-bound activity in the near term, with sellers emerging once prices head above US$2.38, and nervous fund buying emerging once the active May future sinks below the US$2.30 level, McCambridge added.

 

The DTN Meteorlogix forecast said scattered rain generally from a quarter inch to one inch in the western and northern Midwest will recharge soil that hasn't seen much precipitation this winter. The rain should slack off by Sunday.

 

On tap for Friday, the USDA is scheduled to release its supply and demand report at 7:30 CST (1330 GMT). The average of trade guesses from 14 analysts surveyed by Dow Jones Newswires peg 2005-06 estimated ending stocks at 2.338 billion bushels, a 63-million-bushel reduction from February's forecast. The estimates ranged from 2.250 billion bushels to 2.401 billion bushels.

 

Ahead of the open, USDA reported weekly corn export sales totaled 1,424,300 metric tonnes, two-and-one-third times the previous week and 16% above the prior four-week average. Export sales for 2006-07 totaled 9,400 tonnes. Trader expectations ranged from 700,000 to 900,000 tonnes.

 

In pit trades, ABN Amro bought 1,400 May, ADM Investor Services bought 400 May, Citigroup bought 500 July, O'Connor bought 800 May, and Tenco bought 500 May.

 

On the sell side, ABN Amro sold 300 May, JP Morgan sold 1,000 May, and Tenco sold 400 May. Commodity funds were net buyers on the day.

 

Ethanol futures end higher across the board. The April ethanol contract ended 1 cent higher at US$2.37 per gallon.

 

Oat futures ended mixed, with the active May future able to trim its losses after a gap lower start. CBOT March oat futures settled 1/4 cent higher at US$1.80 1/2, and May oats ended 1 1/4 cent lower at US$1.85 per bushel.