April 11, 2007

 

CBOT Corn Review on Tuesday: Settles higher on weather, wheat spillover

 

 

Chicago Board of Trade corn futures ended higher across the board Tuesday, buoyed by speculative buying as weather uncertainties and spillover strength from wheat fostered bullish enthusiasm.

 

May corn settled 5 1/2 cents higher at US$3.69, July corn ended 5 cents higher at US$3.81 1/4, and December finished 8 cents higher at US$3.94 1/2.

 

Weather forecasts for the Midwest are not conducive for a lot of planting progress, and that gave speculative buyers incentive, as talk heats up on potential planting delays, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

New-crop contracts led the upward move, with deferred month/nearby month spreading and the unwinding of soybean/corn spreads featured, traders said. Speculative buying was a feature as well, with a higher stocks figure from the U.S. Department of Agriculture easily overshadowed by weather outlooks and tired downside momentum, traders added.

 

Spillover support from double-digit gains in wheat offered support as well, but with planting uncertainties hyping bullish enthusiasm, prices were easily underpinned, said Chad Henderson, analyst with Prime Ag Consultants in Brookfield, Wisc.

 

However, it's very early to get carried away with planting-delay worries, as a few days of warmer and drier conditions could produce a rapid planting pace, Scoville added. At this point, the planting issues may be more hype, but as long as large speculative traders are buying into the story, many traders are not willing to stand in their way, added Henderson.

 

Cropcast Weather Service said forecast models Tuesday do appear relatively dry for much of next week in the Midwest, as most of the showers late in the six- to 10-day period have slid a bit farther south into the Delta. However, temperatures are still expected to run on the cool side of normal, and this will slow the drying process even if this drier break does verify. In addition, the 11- to 15-day period appears even wetter than Monday's models projected for the Midwest, and this could still allow delays to build as the key part of the corn planting season arrives, Cropcast said in the forecast.

 

USDA raised its estimate of U.S. ending stocks for corn in its April supply/demand report. Corn carryover was seen at 877 million bushels, above with the 826 million-bushel trade estimate, and above March's figure of 752 million.

 

USDA trimmed the feed usage category for corn by 125 million bushels, to 5.850 billion bushels as livestock operators are feeding less higher-priced corn to animals and are substituting other grain, such as wheat, in animal rations. The drop in feed was expected, especially after the March grain stocks report showed a slowdown in usage.

 

In pit trades, FCStonnee and Fimat each bought 500 December, JP Morgan bought 700 July and 1,000 December, Citigroup bought 300 July and 300 December, UBS Securities bought 600 December and USA bought 3,000 December. Speculative fund buying was estimated near 6,000 contracts.

 

On the sell side, JP Morgan sold 800 July and 500 December, Tenco sold 400 July, Citigroup sold 300 December, Man Financial sold 400 July and 500 December, and Rand Financial sold 500 July and 700 December.

 

ADM Investor Services bought 1,000 July US$3.00 puts and JP Morgan sold 1,000 December US$4.00 calls.

 

CBOT oat futures finished modestly higher on commission house buying in medium-volume activity, floor traders said. May oats ended up 1/2 cent at US$2.78 1/2 per bushel, and July oats ended up 1 cent at US$2.85 1/2.

 

Ethanol futures ended firmer. May ethanol finished up US$0.040 at US$2.166 per gallon, while June ethanol rose US$0.056 to US$2.146.