June 8, 2007

 

CBOT Corn Review on Thursday: Settles higher on fund buying

 

 

Chicago Board of Trade corn futures settled sharply higher Thursday, benefiting from commodity fund buying and short covering after recent price weakness, analysts said.

 

July corn rallied 10 cents to US$3.84 3/4 per bushel, September jumped 12 cents to US$3.93 1/2, and December gained 12 1/4 cents to US$3.93 1/2

 

The funds "came in and defended their positions," an analyst said.

 

Futures opened slightly lower but fund buying emerged and selling interest quickly dried up, an open auction trader said.

 

Commodity fund buying was estimated at 12,000 contracts.

 

Some buying interest was attributed to news that forecasters at the National Oceanic and Atmospheric Administration said that the weather phenomenon known as La Nina will materialize in one to three months, an analyst said.

 

The market was oversold and due for a correction, a commission house analyst said. There is a lot of the growing season left and the crop is far from "being put in the bin," the analyst added.

 

Technical buying added to the gains with several months rallying past major moving averages with December settling above its 100-day moving average for the first time since early May.

 

Weekly corn export sales were below analyst expectations but had little impact. The U.S. Department of Agriculture reported corn sales totaled 569,200 metric tonnes, below the 600,000 to 1.0 million metric tonnes forecast by analysts. Included in the total was 193,400 tonnes for delivery in the 2007-08 marketing year.

 

Corn's price direction on Friday will depend on if the funds continue to buy, the overnight weather and any position squaring ahead of Monday's supply and demand report, a commission house analyst said.

 

In open auction trades, JP Morgan bought 1,000 July and 500 December.

 

In options trading, ABN Amro bought 1,000 September US$4.00 calls and 1,500 July US$4.00 calls. Fimat sold 1,000 July US$4.20 calls.

 

Oat futures settled higher in light trade with spillover support from corn underpinning the market, an analyst said. Light fund buying in July added to the strength with commission houses were on either side of the market, he added.

 

July oats gained 3 cents to US$2.93 1/2 per bushel and December rose 4 cents to US$2.83 3/4.

 

Ethanol futures ended with modest losses in this trade. July ethanol slipped ,006 cent lower to US$1.985 per gallon and August fell 2.1 cents to US$1.95.