March 30, 2007

 

CBOT Corn Review on Thursday: Settles higher before USDA reports

 

 

Chicago Board of Trade corn futures settled higher Thursday as short covering before Friday's U.S. Department of Agriculture planting intentions and stocks report supported prices, floor traders said.

 

The USDA report is scheduled for release at 8:30 a.m. EDT (1230 GMT).

 

May corn rose 6 cents to US$3.94 1/2 per bushel, July gained 5 1/4 cents to US$4.05 1/2, and December settled 2 3/4 cents higher at US$4.03 1/2.

 

Corn traders covered some of their short positions with some of it fund related, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D. There was also corn call options buying by funds as insurance against any wild price movement after the reports are released, Hoops said.

 

U.S. corn planted acreage for the 2007-08 marketing year is estimated at 88.061 million acres, according to a survey of 22 analysts conducted by Dow Jones Newswires. This is 9.7 million acres higher than the 78.3 million planted last year and above the 87.0 million acres estimated by the USDA at its Outlook Forum earlier in March.

 

U.S. quarterly corn stocks were estimated at 6.023 billion bushels as of March 1, 2007, according to a survey of 15 analysts conducted by Dow Jones. Stocks as of March 1, 2006 were estimated at 6.987 billion bushels by the USDA.

 

Bear spreading has been popular over the past several weeks, and Thursday some participants unwound some of those spreads, buying the nearby and selling the deferred, and that also helped the nearby finish stronger, Hoops added.

 

Sharply higher crude oil prices also added to the gains in corn, a commission house analyst said. Crude oil futures were over US$2 per barrel higher when corn closed.

 

"Corn is cheap compared to crude oil," the analyst said.

 

Export sales were released before the opening and were slightly supportive, a floor trader said.

 

Weekly corn exports were 1.156 million metric tonnes for the week ended March 22, above the 650,000-1.0 million tonnes expected by analysts.

 

"This is the most important acreage report in history," said Hoops, and corn's price direction depends on what the report reveals, he said.

 

On daily technical charts, May remained below its 100-day moving average, and the 14-day relative strength index is 40.25.

 

Buyers on Thursday included FC Stonnee, which bought 2,500 July and 1,000 September, and Rand, which bought 500 July.

 

JP Morgan sold 1,500 July and 600 December, and Fimat sold 600 July.

 

Commodity fund buying was estimated at 10,000 contracts.

 

In options trading, heavy call buying was noted with Penson GHCO a heavy buyer of the May US$3.90, US$4.00 and US$4.10 calls.

 

Oat futures settled higher as spillover strength from the rest of the floor helped underpin oat values, a commission house analyst said. Light bear market spreading helped support the nearby contracts at the expense of the deferred months, he added.

 

May oats settled 3 3/4 cents higher at US$2.92 per bushel and July also ended up 3 3/4 cents at US$2.94 3/4.

 

Ethanol futures ended mostly higher in modest trade. The April contract settled 1.5 cents higher at US$2.27 per gallon. The May contract rose 3.4 cents to US$2.18.