March 11, 2008

 

CBOT Corn Review on Monday: Rebounds on spillover, exhausted selling

 

 

Chicago Board of Trade corn futures ended higher Monday, bouncing up sharply from early losses amid exhausted selling and spillover from recoveries in outside markets.

 

March corn ended 22 cents higher at US$5.55 1/2; May corn settled 18 1/2 cents higher at US$5.65 3/4; and December finished 19 3/4 cents higher at US$5.79.

 

Corn futures tumbled to limit-down levels in early trading, but the exhaustion of liquidation pressure, the ability of soybeans to trade off their lows and spillover strength from wheat futures gave the market a boost to propel it higher, analysts said.

 

The sentiment was that the market's recent corrective setback had pressured prices enough, they said, particularly with the bullish features of fundamental uncertainties about 2008 acreage, weather concerns and projected usage outlooks providing more upside potential than down.

 

Technical weakness and speculative money flowing out of the market had led to the previous declines, but once that slowed, market fundamentals jumped back in to buoy prices, a CBOT floor analyst said.

 

In addition, he said, spillover strength from record highs in crude oil, the weak U.S. dollar and end-user buying at the lows allowed futures to get pass the meltdown in prices, opening the door for the day's recovery.

 

On tap for Tuesday, the U.S. Department of Agriculture is scheduled to release March supply/demand data at 8:30 a.m. EDT. Few if any changes are expected in the government's 2007-08 corn ending-stocks estimate despite continued strong export sales, with most analysts looking ahead to the quarterly stocks data due out March 31 for any significant revisions.

 

The average estimate for U.S. corn ending stocks was 1.435 billion bushels, 3 million bushels below the 1.438 billion forecast in February by the USDA, according to a survey of 14 analysts by Dow Jones Newswires.

 

In other news, the CBOT announced Monday, pending approval by the Commodity Futures Trading Commission, daily price limits will increase March 28 for corn, mini-sized corn, soybeans, mini-sized soybeans and soybean oil futures and options on futures contracts. Daily limits on corn futures would rise from 20 cents to 30 cents.

 

The CBOT also said that options on futures contracts for corn, wheat, soybeans, soybean meal, soybean oil, rough rice and oats will be available for electronic trading on the CME Globex(R) platform during daytime open outcry trading hours beginning April 14.

 

In pit trades, Tenco bought 2,000 May and 800 December, Newedge bought 700 May, and Merrill Lynch bought 400 December. Sellers were scattered among various commission houses. Speculative fund-buying was estimated at 8,000 lots.

 

CBOT oat futures closed in negative territory but well off session lows. Fund-selling and early spillover pressure weighed on the market, a floor trader said. May oats ended down 8 1/2 cents at US$3.90 3/4 a bushel after falling limit down, or 20 cents lower, in early activity.

 

Ethanol futures finished firmer. April ethanol ended up 3.9 cents at US$2.389 a gallon, while May ethanol settled up 4 cents at US$2.368.