March 22, 2007

 

CBOT Corn Review on Wednesday: Settles higher on fund buying, bull spreads

 

 

Chicago Board of Trade corn futures ended higher Wednesday in choppy trading, with speculative fund and technical buying boosting prices, a commission house analyst said.

 

Bull market spreading, or buying of the nearby contracts and selling of the deferred months, also supplied support to old-crop contracts, the analyst added.

 

May corn settled 4 1/2 cents higher to US$4.09 3/4 per bushel, July gained 4 1/4 cents to US$4.21 1/4, and December rose 1/4 cent to US$4.09 1/2.

 

The funds appear to have finished liquidating their old-crop contracts, and with, that the market was due for a correction, said John Kleist of Top Third Ag Marketing in Chicago. The funds are sitting with a lot of potential firepower to the upside as it looks as though they have not replaced everything they liquidated in the old crop with positions in the new-crop months, he added.

 

Commodity fund buying helped support the market most of the day, with additional fund buying, thought to be index related, adding to the strength near the close, a commission house analyst said.

 

Overall fund buying was estimated at 8,000 contracts.

 

The market could see continued consolidation Wednesday after the recent weakness as bull spreading could continue, Kleist said.

 

The funds are waiting for the next big play, and that is the planting intentions report due out next Friday, he added.

 

On daily technical charts, May settled above its 10-day moving average for the first time since Feb. 28.

 

Buyers on Wednesday included ADM, which bought 500 May and 300 July; Fimat, which bought 600 July; and UBS, which bought 500 July.

 

Sellers included JP Morgan, which sold 500 May; and UBS, which sold 800 July.

 

In options trading, JP Morgan bought 1,000 December US$4.10 calls and 1,000 December US$5.00 calls and sold 1,000 December US$3.50 puts.

 

Oat futures finished modestly higher, with the July future establishing a new-life-of contract high on fund buying, a commission house analyst said. Light profit taking trimmed most of the gains near the close, a floor trader said.

 

May oats ended 1/4 cent higher at US$2.83 3/4 per bushel, and July settled 1 3/4 cents higher to US$2.86 1/2.

 

Ethanol futures ended lower in thin trade. The April contract slipped .005 cent to US$2.300 per gallon. The May contract also settled down .005 cent, to US$2.175 per gallon.

 

Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the period ending March 15. Analysts expect sales between 700,000 and 1.0 million metric tonnes.