June 22, 2006

 

CBOT Corn Review on Wednesday: Finishes stronger as market consolidates

 

 

Corn futures settled higher, bolstered by market consolidation after recent losses and technical strength, floor sources said.

 

July gained 3 cents to US$2.32 3/4 per bushel and December also ended up 3 cents at US$2.59.

 

There are several reasons why the market worked its way higher Wednesday, said John Kleist of Kleist Ag Consulting in Arlingtonne Heights, Ill. There have been pretty decent export sales announced by the USDA over the past several days, revealing demand from importers for U.S. corn at these price levels, he said.

 

In addition, the market was oversold and due for consolidation, and prices opened firm even with the rain on LaSalle Street, he added.

 

The market was oversold technically and due for a bounce, a floor analyst said. Although the midday weather forecasts didn't change in the near-term, corn still has to go through its critical pollination phase next month, with a lot of the growing season left, he added.

 

Several floor traders noted options related trading supporting futures with Tenco buying 4,000 December US$2.80 calls and Selling 8,000 December US$2.30 puts.

 

In the western U.S. Midwest, showers and storms are forecast to bring as much as 0.75 inch to parts of the region over the next two days with up to 1.00 inch in areas of the eastern U.S. Midwest, DTN Meteorologix Weather said.

 

Temperatures west of the Mississippi River are predicted to average near to above normal in the period, while east of the Mississippi River, temperatures are expected to average near to below normal in the north and near to above normal in the central and southern sections of the region, DTN Meteorologix Weather said.

 

On technical charts, December settled above its 200-day moving average but below the 100-day. December's 14-day relative strength index rose to 39.67 from Tuesday's 35.86.

 

Buyers Wednesday included Rand Financial, which bought 2,500 December, Fimat bought 1,000 September and 400 July, Rosenthal bought 700 December and 400 July, and the USA trading division of Man Financial bought 700 December and 600 July.

 

Sellers Wednesday included Goldenberg-Hehmeyer, which sold 2,000 December, ADM sold 300 July, ABN Amro sold 300 December and 200 July and the Century division of Man Financial sold 500 December.

 

Overall commodity fund buying was estimated at 3,400 contracts.

 

Oat futures ended higher as fund buying supported prices with new life of contract highs set in several months. The funds appeared to be adding to their positions in December today, a local trader said.

 

July oats settled 5 1/2 cents higher at US$2.02 per bushel and December oats gained 6 cents to US$2.02 3/4.

 

Ethanol futures settled mixed in modest trade. The July contract declined 15 cents to US$4.08 per gallon with the August contract up 10 cents to US$3.38.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ended June 15 at 7:30 a.m. CDT. Analysts expect corn export sales between 1.1-1.6 million metric tonnes versus last week's 1.539 million.