March 12, 2008

 

CBOT Corn Review on Tuesday: Higher on speculative buying, wheat

 

 

Chicago Board of Trade corn futures finished higher Tuesday but down from session highs in choppy, two-sided trade.

 

May corn settled 6 3/4 cents higher at US$5.72 1/2 per bushel, July gained 6 1/4 cents to US$5.84 1/2, and December rose 6 3/4 cents to US$5.85 3/4. July set a new all-time high of US$5.93 per bushel in electronic trade.

 

Despite a neutral supply and demand report from the U.S. Department of Agriculture, corn was supported by speculative buying, said Vic Lespinasse, an analyst at Illinois Grain.

 

In open auction trading, fund buying was estimated at 7,000 contracts.

 

The USDA reported that 2007-08 U.S. corn ending stocks were 1.438 billion bushels, unchanged from February and slightly above the average analyst estimate of 1.435 billion. There were few changes in the world carryover with the USDA pegging world corn ending stocks at 104.0 million metric tonnes, up slightly from the 101.9 million projected last month.

 

Sharply higher wheat futures added support with some additional early strength coming from soybeans, Lespinasse said.

 

CBOT May wheat settled limit up, 60 cents higher at US$12.23 per bushel and May soybeans ended just 1 1/4 cents higher at US$14.07 3/4.

 

Corn was also influenced by crude oil futures, which scored another all-time high and settled at a new high close.

 

A move by the Fed to add US$200 billion worth of reserves to the U.S. financial system didn't have much of an impact on corn, though it could be negative if speculative money moves back into equities from commodities. However, if it's viewed as inflationary, it will support commodities, an analyst said.

 

Price direction on Wednesday will depend on the news overnight and how it influences the market. Corn has been very choppy recently and will probably stay that way in the short term, an electronic trader said.

 

On daily open auction technical charts, May corn settled above its major moving averages.

 

In options trading, FC Stonnee sold 2,000 December US$6.00 calls and ADM Investor Services bought 1,500 December US$3.50 puts.

 

Oat futures settled higher, although the "trade wasn't very robust," an analyst said. "Oats got too cheap in relation to corn recently and caught up a bit Tuesday," the analyst said.

 

May oats jumped 12 1/4 cents to US$4.03 per bushel.

 

Ethanol futures ended higher. April ethanol gained 1.9 cents to US$2.408 per gallon and May settled 2.6 cents higher at US$2.394.