March 30, 2006

 

CBOT Corn Review on Wednesday: Climbs quietly on speculative, local buying

 

 

Chicago Board of Trade corn futures ended higher Wednesday, quietly extending near the upper end of a two-week trading range on light speculative buying.

 

CBOT May corn settled 2 cents higher at US$2.24 1/4, July corn ended 2 1/4 cents higher at US$2.35 1/2 and December corn finished 2 1/4 cents higher at US$2.56 3/4.

 

The market managed to push higher in the absence of fresh fundamental support, as traders positioned themselves ahead of Friday's U.S. Department of Agriculture reports, analysts said.

 

A quiet news front failed to stimulate strong interest, but with aggressive speculative selling absent, combined with the ability of May futures to eclipse resistance at its 100-day moving average, local and fund buying kept prices firmly planted in positive territory.

 

The theme was consistent from the outset. But prices failed to challenge the upper end of the recent trading range, as bearish pre-planting weather conditions and ample U.S. supplies continue to overhang the market.

 

Meanwhile, solid demand with a consistent export pace and good domestic usage provide underlying support to limit downside pressure heading toward the end of the month and quarter.

 

The USDA is expected show a moderate decrease in U.S. corn seedings from 2005 plantings, while solid second-quarter usage is still expected to reveal record corn stocks as of March 1, in its prospective planting and quarterly grain stock reports scheduled for release Friday at 8:30 a.m. EST. The average of estimates taken from analysts surveyed by Dow Jones Newswires peg U.S. 2006 corn acreage at 80.576 million acres, down 1.18 million acres from 2005's seedings, and corn stocks at 6.987 billion bushels.

 

USDA is scheduled Thursday to release its weekly export sales report for the week ended March 23. Analysts surveyed by Dow Jones Newswires anticipate commitments in a range of 900,000 to 1,100,000 metric tonnes.

 

The DTN Meteorlogix weather forecast calls for a healthy dose of rain in the western and northern Midwest - west of the Mississippi River - to result in a good buildup in soil moisture levels ahead of spring fieldwork during the final half of the week. There will be some snow along with rain in the Dakotas and Minnesota. This moisture is well-timed - still ahead of the busiest stretch of fieldwork. Eastern Midwest areas will receive up to one inch of rain. The past three weeks have been beneficial for moisture in this area, Meteorlogix added.

 

In pit trades, Calyon Financial bought 800 May; Fimat bought 800 July; JP Morgan bought 400 May, 500 July and 1,500 December; Refco bought 1,000 May; and Tenco bought 1,300 May. Commodity funds were estimated buyers of over 5,000 contracts.

 

On the sell side, Bunge Chicago sold 600 July, Fimat sold 600 May, and JP Morgan sold 500 May.

 

Ethanol futures ended modestly up Wednesday. The April ethanol contract settled 1 1/2 cents higher at US$2.49 1/2 per gallon.

 

Oat futures finished on the defensive, as the market awaits fresh news and Friday's USDA planting and stock reports. CBOT May oat futures settled 2 3/4 cents lower at US$1.71 1/4 and July oats ended 2 cents lower at US$1.74 1/2 per bushel.