March 31, 2006

 

CBOT Corn Review on Thursday: End firm ahead of USDA reports

 

 

Chicago Board of Trade corn futures ended on firm footing Thursday, finishing at session highs on speculative buying and pre-report, end-of-month short covering, traders said.

 

CBOT May corn settled 3 1/2 cents higher at US$2.27 3/4, July corn ended 3 1/4 cents higher at US$2.38 3/4 and December corn finished 3 1/4 cents higher at US$2.60.

 

The market managed to extend to two-week highs, as speculative buyers continued to creep back in the market amid outlooks for lower 2006 U.S. corn acres and solid underlying demand, analysts said.

 

"The market's demand base is better than we have seen in a while, with exports, ethanol production and feed use moving along at steady clips," said a CBOT commission house broker.

 

The theme was consistent from the outset, with futures garnering speculative interest amid the strength of outside metals markets. The ability of May futures to push through technical resistance at Wednesday's high of US$2.25 and then its 20-day moving average added to the upward tonnee.

 

Nevertheless, activity was relatively subdued. Traders were unwilling to take on added risk heading into Friday's reports, particularly with the potential for end-of-the- month fund positioning to emerge at anytime, pit traders added.

 

Otherwise, a quiet news front failed to provide a directive influence, with the market hovering in a range for most of the day after satisfying early upside technical objectives.

 

The USDA is expected to 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.

 

Ahead of the open, USDA reported 2005-06 corn weekly export sales totaled 1,038,900 metric tonnes, 14% above the previous week and 6% above the prior four-week average. The 2006/07 marketing-year sales totaled 106,900 tonnes. Trader expectations ranged from 900,000 to 1,100,000 tonnes.

 

The DTN Meteorlogix weather forecast calls for a healthy dose of rain in the Midwest during the next week. Total rainfall by the end of next week may reach three-plus inches in the western and northern Midwest - west of the Mississippi River - and up to two-plus inches east of the Mississippi. Some delays in early season fieldwork will occur because of the wet weather. However, the improvement in soil moisture is a significant compensation for fieldwork delays at this point in the season, Meteorlogix adds.

 

In pit trades, FCStonnee bought 400 December, ABN Amro bought 800 May, Calyon Financial bought 1,000 May, Fimat bought 700 May, O'Connor bought 500 May, RJ O'Brien bought 800 May and Rosenthal bought 600 May.

 

On the sell side, Fimat sold 500 May, JP Morgan sold 1,500 May, O'Connor sold 400 May, and Refco sold 1,200 May. Commodity funds were estimated buyers of over 5,000 contracts on the day.

 

Ethanol futures finished higher across the board. The April ethanol contract settled 2 1/2 cents higher at US$2.52 and May futures ended 3 cents higher at US$2.53 1/2 per gallon.

 

Oat futures finished on firm footing, awaiting fresh news and Friday's USDA planting and stock reports. CBOT May oat futures settled 1 cent higher at US$1.72 1/4 and July oats ended 1/2 cent higher at US$1.75 per bushel.