April 14, 2007

 

CBOT Corn Review on Friday: Higher; rallies on speculative short covering

 

 

Chicago Board of Trade corn futures ended sharply higher Friday, rallying on speculative buying amid the uncertainty of planting opportunities in the Midwest next week.

 

May corn settled 10 1/4 cents higher at US$3.69, July corn ended 10 cents higher at US$3.81 1/2, and December finished 7 3/4 cents higher at US$3.95.

 

Speculative short covering was a featured attraction, with traders unwilling to take on added risk heading into the weekend amid the market's vulnerability to changing weather forecasts, analysts said.

 

The market is getting to a point where farmers need a break from wet, cool temperatures to get the corn crop planted. With seedings already running behind, prices have to move to encourage producers not to switch planting intentions amid the strong demand base of the corn market, said Dan Basse, president AgResource Co. in Chicago.

 

Spillover support from sharply higher wheat futures aided the firm tonnee, with corn/soybean spreading underpinning prices as well.

 

Nevertheless, pre-weekend short covering was underpinning feature, as the uncertainty of weather forecasts and debates over how long of a window farmers will have to plant next week sent sellers running for cover, traders said.

 

Monday, the U.S. Department of Agriculture will release its weekly crop progress report 4 p.m. EDT (2200 GMT). Analysts expect planting progress at 5% to 8% complete, versus the average pace of 10%. The DTN Meteorlogix Weather Service forecasts for the coming week remain unfavorable for field work prospects in the Midwest. Temperatures will be normal to below normal. Precipitation will be normal to above normal west of the Mississippi River, and normal to below normal to the east. This continues a difficult outlook for field work, and will further delay the warming of soils. Plains areas will have a similar weather scenario.

 

In pit trades, JP Morgan bought 1,200 July, Man Financial bought 300 July and 1,500 December, Rand Financial bought 400 July and 400 November, Fimat bought 400 July and ADM Investor Services bought 400 December. JP Morgan sold 600 December, Fimat sold 300 July and UBS Securities sold 600 July. Speculative fund buying was estimated near 10,000 contracts.

 

CBOT oat futures closed mixed in a recovery from earlier losses. Commission house and fund buying sparked a turnaround, traders said. May oats ended up 1 1/2 cents at US$2.71 per bushel, and July oats finished flat at US$2.76.

 

CBOT ethanol futures closed lower. May ethanol ended down US$0.050 at US$2.230 per gallon. June ethanol slipped US$0.040 to US$2.170.