July 11, 2007

 

CBOT Corn Review on Tuesday: Higher on soy rally, short covering

 

 

Chicago Board of Trade corn futures ended firm Tuesday, benefiting from spillover buying from sharply higher soymeal and soybean futures, analysts said. Both soybean meal and soybeans made new contract highs in some months.

 

July corn gained 5 1/2 cents to US$3.38 per bushel, Sept. rose 6 1/4 cents to US$3.45 1/2, and Dec. rallied 6 3/4 cents to US$3.57.

 

"Corn was higher by default," a commission house analyst said. "Without the rally in soybeans and soymeal, corn would have had a hard time ending higher," the analyst said.

 

Short covering ahead of the supply/demand report helped corn rally with light technical buying adding to the strength, a trader said.

 

Commodity fund buying was estimated at 6,000 contracts.

 

2007-08 corn ending stocks are estimated at 1.418 billion bushels, sharply above the 997 million estimated in June, according to a survey of 15 analysts by Dow Jones Newswires.

 

The average ending stocks estimate for the 2006-07 crop year was 1.031 billion bushels, 44 million bushels above the 987 million estimated in June, according to an average of 14 analysts.

 

The U.S. Department of Agriculture is scheduled to release the July supply and demand report Thursday at 8:30 a.m. EDT (1230 GMT).

 

Near-term weather forecasts remained supportive to crop development but longer-term forecasts indicate hot and dry weather to return to the U.S. Midwest which also added to the firm tonnee, an analyst said.

 

Drier than normal conditions are expected over the next 10 days in parts of the western U.S. Midwest, Cropcast Weather said in a note to clients.

 

Price direction on Wednesday will depend on overnight weather forecasts, the direction of soybeans and if there is additional short covering ahead of the USDA report on Thursday, a trader said.

 

On day session technical charts electronically traded December settled above its 10-day moving average for the first time since June 18.

 

In open auction trading, JP Morgan bought 1,300 December and Penson GHCO bought 600 December. Man Financial sold 1,800 December and 1,000 September.

 

In options trading, JP Morgan sold 2,000 December US$4.10 calls and 1,000 December US$4.20 calls.

 

Oat futures settled moderately higher as fund buying in December helped lift prices higher, an analyst said. The funds were buyers and technically the market is looking positive as well, he said. Spot-month July oats jumped 10 1/4 cents to US$2.94 1/4 per bushel and December gained 5 1/2 cents to US$2.74.

 

Ethanol futures finished higher in light trade. August ethanol settled 5.1 cents to US$1.99 per gallon and October rose 5 cents to US$1.92.