April 5, 2007

 

CBOT Corn Review on Wednesday: Settles sharply higher on weather, funds

 

 

Chicago Board of Trade corn futures settled sharply higher Wednesday as technical fund buying and cold, wet weather forecasts pushed prices higher, a floor analyst said.

 

May corn rallied 13 cents higher to US$3.59 1/4 per bushel, July gained 13 1/4 cents to US$3.71 1/2 and December also rose 13 cents to US$3.80 1/2.

 

Corn was oversold and due for a correction, the floor analyst said. May corn settled above its 200-day moving average on Tuesday and that helped bring fund buying interest back into the market, the analyst said.

 

Commodity fund buying was estimated at 15,000 contracts.

 

The market was overdone to the downside after the recent weakness, but the weather had the biggest influence on prices Wednesday, a commission house trader said.

 

Despite the large increase in planted acreage estimates this year, corn planting still needs to get off to a good start, and the market is concerned that the cold weather forecast over the next several days - which is expected to be followed by a wet weather pattern - could delay planting, the trader said.

 

Market direction on Thursday depends on the overnight weather forecasts, but there could also be some follow-through buying as well, the commission house analyst said.

 

On daily technical charts, May slightly filled the downside gap created between Friday and Monday's sessions on the upside but remained below most major moving averages. May's 9-day relative strength index is 30.43 up from Tuesday's 16.54.

 

Buyers Wednesday included Tenco, which bought 800 December; Man Financial, which bought 1,000 July; and RJ O'Brien, which bought 1,000 December.

 

Citigroup sold 2,000 December, ADM sold 1,000 July and JP Morgan sold 800 December.

 

In options trading, JP Morgan bought 2,500 July US$3.80 calls and sold 2,500 July US$4.40 calls. Bunge bought 2,000 May US$4.00 calls.

 

Oat futures finished modestly higher as light commercial-related buying helped support prices in quiet activity, a floor analyst said.

 

May oats settled 3 cents higher at US$2.76 per bushel and July rose 2 cents to US$2.81 3/4.

 

Ethanol futures ended mixed in thin activity. The April contract settled 2 cents lower at 2.12 per gallon. May ethanol finished up 1 cent at US$2.10.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report for the period ending March 29. Analysts expect corn sales between 800,000-1.0 million metric tonnes. Sales for the week ended March 22 were 1.156 million tonnes.