March 11, 2006

 

CBOT Corn Review on Friday: Ends higher on speculative buying

 

 

Corn futures at the Chicago Board of Trade ended higher Friday, matching the week's highs on speculative buying.

 

CBOT March corn settled 2 3/4 cents higher at US$2.26, and May corn ended 2 1/2 cents higher at US$2.34 1/2.

 

The market has managed to ignore bearish supply-side fundamentals as well as improved weather conditions heading into the planting season amid the price strength associated with speculative buying, said a CBOT commission house broker.

 

Speculative fund buying was estimated near 4,000 contracts, with futures able to shake off late spillover weakness from wheat and soybeans. The U.S. Department of Agriculture's supply and demand report was deemed a non-event as the projections fell in line with analyst expectations.

 

The lack of any fundamental drivers rekindled speculative interest, with futures quickly erasing early losses in a continuation of Thursday's price strength. Traders said bearish influences are factored into prices, and without any speculative push to extend losses below the US$2.30-per-bushel level basis May make it tough to sell into the market.

 

This continued with futures settling into narrow price ranges through midday, before another wave of speculative buying enticed local traders into pushing prices higher.

 

However, the market's inability to breach resistance at US$2.35 3/4 - the bottom of a chart gap left from Monday - stalled the rally and attracted some light profit-taking to trim the gains on the close, traders said.

 

Ahead of the open, USDA reported 2005-06 U.S. corn ending stocks at 2.351 billion bushels, above the average trade estimate of 2.338 billion. The projection for corn exports was raised 50 million bushels to 1.900 billion bushels due to larger-than-expected U.S. sales to Asian markets, USDA said. On the world balance sheet, ending stocks edged higher to 130.2 million tonnes from last month's 128.16 million.

 

Meanwhile, Informa Economic pegs U.S. corn seedings at 80.091 million acres, down from 2004-05 plantings of 81.8 million acres. USDA is scheduled to release its prospective plantings figures March 31.

 

The DTN Meteorlogix forecast calls for rain of up to 1 1/4 inches from the mid-Mississippi Valley through the Ohio Valley Saturday night into Sunday, followed by rainfall of up to 1 inch on Monday. The rains will give some good recharge of soil moisture in the central and southeastern areas of the Midwest. In the western Midwest, west of the Mississippi, rainfall of up to 1 inch is in store during the weekend over most of the region.

 

In pit trades, ABN Amro bought 500 May; JP Morgan bought 400 May and 500 July; Refco bought 1,300 May; Rosenthal and Tenco each bought 500 May; and Shatkin/Arbor bought 400 May.

 

On the sell side, JP Morgan, Fimat, Shatkin/Arbor and Tenco each sold 500 May.

 

Commodity fund buying was estimated near 4,000 lots.

 

Ethanol futures were untraded Friday. The April ethanol contract settled unchanged at US$2.37 per gallon. Oat futures ended higher, in line with other grains. CBOT March oat futures settled 1 1/2 cent higher at US$1.82 and May oats ended 1/4 cent higher at US$1.85 1/4 per bushel.