May 11, 2006

 

CBOT Corn Review on Wednesday: Modestly higher on technical buying

 

 

Corn futures at the Chicago Board of Trade settled higher and near the mid-point of the day's range Wednesday as technical buying supported prices near the close, floor sources said.

 

The July contract gained 2 cents to US$2.40 per bushel and the December contract settled 2 1/4 cents higher at US$2.65 1/4.

 

The absence of strong selling interest helped July push above technical resistance at US$2.42 and helped extend the gains, a commission house analyst said.

 

However, the lack of additional buying and profit taking near the close trimmed some of the gains, he added.

 

Late weakness in both wheat and soybeans also helped reduce the advances, a floor trader said. A turnaround to higher prices in crude oil and gold also lent some support, he added.

 

Trading was quiet for most of the session with position squaring ahead of the USDA's supply and demand report on Friday a feature as well, a floor source said.

 

The U.S. Department of Agriculture is scheduled to release the May supply and demand report for the 2005-06 and 2006-07 crop years on Friday at 7:30 a.m. CDT (1230 GMT).

 

An average of 14 analysts surveyed by Dow Jones Newswires expects 2005-06 corn ending stocks at 2.265 billion bushels, 36 million below the 2.301 estimated by the USDA in April.

 

The average ending stocks estimate for 2006-07 was 1.582 billion bushels. This will be the first ending stocks estimate issued by the USDA for the 2006-07 crop year.

 

Traders and analysts dismissed near-term forecasts for rain over the next several days, with one noting that "early season moisture is good for the crop, conditions are perfect."

 

Scattered light showers or drizzle is forecast over the next several days in the western U.S. Midwest, with amounts expected a trace to .50 inch, DTN Meteorologix Weather said. Temperatures in the region are expected below to much below normal Thursday and Friday.

 

In the eastern U.S. Midwest, rain and thunderstorms are forecast for Wednesday night into Thursday with amounts of .50 to 2.00 inches possible and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to average below to well below normal in the period, DTN Meteorologix Weather said.

 

On daily technical charts, July corn settled above its 100-day moving average but below its 10-day, 20-day and 50-day moving averages.

 

Buyers Wednesday included Goldenberg-Hehmeyer, which bought 1,000 July. Fimat bought 1,000 July, UBS bought 900 July, JP Morgan bought 500 July, and FC Stonnee bought 700 December 2007.

 

Sellers Wednesday included Fimat, which sold 1,300 July. RJ O'Brien sold 1,300 July, FC Stonnee sold 400 December, Calyon sold 500 July, and Man Financial sold 200 July.

 

In spread trading, JP Morgan bought 2,000 September-July and O'Connor bought 1,000 September-July.

 

Net commodity fund buying was estimated at 2,000 contracts.

 

Oat futures finished mixed as the absence of buying interest limited activity, a floor trader said. A Statistics Canada oat stocks report was termed mildly supportive, but it also highlighted that ample supplies remain available, a commission house analyst said. The July contract slipped 1/4 cent to US$1.89 per bushel and the December contract gained 1 cent to US$1.82 3/4.

 

Ethanol futures settled higher in thin trade. The June contract gained 6 cents to US$2.83 per gallon and the July contract jumped 9 1/2 cents to US$2.73.

 

On Thursday, the USDA is scheduled to release the weekly export sales report for the week ended May 4 at 7:30 a.m. CDT.

 

Analysts estimate corn sales between 600,000-1 million metric tonnes. Sales for the week ended Apr. 27 totaled 1,282.2 million tonnes.