July 13, 2006

 

CBOT Corn Review on Wednesday: Higher on heavy fund buying late

 

 

Corn futures at the Chicago Board of Trade settled near session highs Wednesday in active trading on the close as heavy fund buying late in the day boosted prices, sources said.

 

July corn gained 5 1/2 cents to US$2.59 1/4, and December rose 4 3/4 cents to US$2.84, after trading as high as US$2.84 1/2, its highest level in six weeks.

 

The U.S. Department of Agriculture reports released Wednesday morning were termed "supportive" by analysts, but the main focus remains the weather in the U.S. Midwest, they said.

 

The USDA estimated 2006-07 corn ending stocks at 1.077 billion bushels, below the 1.091 billion estimated in the June report and well below the average analyst estimate of 1.266 billion. The number was supportive as it is based off of the higher acreage figure from late June, and is still lower than the earlier June stocks figure, a commission house broker said.

 

In addition, the USDA cut the 2005-06 ending stocks by 114 million bushels as it increased its domestic feed usage estimate by 100 million bushels and exports by 25 million.

 

The market's attention, however, was dominated by the weather with the reports put in the background, a floor trader said.

 

Midday weather forecasts were termed "confusing" by a floor trader. Some forecasters added more precipitation to their forecasts for the Midwest while others predicted that hot temperatures expected for this weekend and early next week could be extended further into next week, he said.

 

Fund activity was also seen as a major feature, a commission house analyst said. Early in the day, the funds were moderate sellers helping to press the market to its lows of the day. However, prices recovered after the selling interest waned with the market moving higher as the funds entered the market as buyers late, the analyst added.

 

Fund buying was estimated at 10,000 contracts, a turnaround from earlier in the session when they were estimated sellers of 6,000 contracts, sources said.

 

On technical charts, December traded an outside day, above the Tuesday's high and below Tuesday's low on day-only technical charts.

 

Buyers Wednesday included O'Connor, which bought 6,000 September, JP Morgan bought 3,000 December, UBS bought 2,000 September, Man Financial bought 1,500

 

September, and FC Stonnee bought 1,400 December.

 

Sellers Wednesday included FC Stonnee, which sold 4,000 December, JP Morgan sold 3,000 December, Citigroup sold 2,000 December, Rand Financial sold 1,500 December, Rand Financial sold 1,300 December and 500 new December and ABN Amro sold 1,200 December.

 

Oat futures settled lower, retreating from new contract highs set in some months as liquidation in the July futures pressured the market as did light fund selling, a floor trader said.

 

July oats fell 6 1/2 cents to US$2.25 per bushel and the December contract slipped 1 cent to US$2.06.

 

Ethanol futures settled mostly higher in modest trade. The August contract rose 12 cents to US$3.00 per gallon and the September contract added 15 cents to US$2.70.

 

On Thursday, the USDA is scheduled to release the weekly export sales report for the week ended July 6. Analysts expect sales between 700,000-1.0 million metric tonnes. Last week, sales were 1,274.7 million metric tonnes.