March 22, 2006

 

CBOT Corn Review on Tuesday: Rallies; bounces back from prior losses

 

 

Chicago Board of Trade corn futures bounced back from prior losses Tuesday, staging a relief rally after stumbling lower over the past 2 1/2 weeks.

 

CBOT May corn settled 5 1/4 cents higher at US$2.23 1/2, and July corn ended 5 3/4 cents higher at US$2.34 1/2.

 

The market was overdue for an upturn in prices, with the exhaustion of fund selling opening the door for speculative and commercial buyers to firmly underpin prices, analysts said.

 

A quiet news front kept technical factors in play, with the inability of futures to test Monday's lows, kickstarting the upward bounce. This was consistent throughout the day, with a healthy dose of speculative buying and bullish options plays keeping the supportive theme in play.

 

Trader said the bulk of the day's advances were tied to aggressive options plays that forced option traders into buying in the neighborhood of 10,000 futures contracts. Floor sources said ABN Amro bought 12,000 May US$2.10 calls over the course of the day.

 

Otherwise activity remained subdued, with a quiet news front failing to provide any influence on direction. This continued, until late options buying and speculative buying in futures uncovered pre-placed buy orders once the active May future pierced through resistance at its 100-day moving average - US$2.23.

 

Meanwhile, the DTN Meteorlogix forecast calls said snowy and windy conditions moved across the western, central and southern Midwest Tuesday. Blizzard-strength winds were in store for central and southern Illinois.

 

The heavy snow is providing some notable addition to soil moisture profiles, with melted precipitation from the snow totaling more than one inch in many locations.

 

In pit trades, ABN Amro bought 7,000 May and 4,000 July, Fimat bought 400 May, Man Financial bought 500 May, JP Morgan bought 1,000 May and 500 December, Refco bought 600 May. Commodity fund buying was estimated between 9,000 and 12,000 contracts.

 

On the sell side, Fimat sold 2,000 May, JP Morgan sold 700 may and 500 December and Refco sold 400 May.

 

In options, ABN Amro was a reported buyer of 12,000 May US$2.10 calls.

 

Ethanol futures ended higher across the board Tuesday. The April ethanol contract settled 1 cent higher at US$2.40 and May futures ended 1 cent higher at US$2.41 per gallon.

 

Oat futures ended mixed, stabilizing after a string of speculative induced losses. CBOT May oat futures settled 1/2 cent lower at US$1.70 1/4 and July oats ended unchanged at US$1.74 1/2 per bushel.