August 22, 2007

 

CBOT Corn Review on Tuesday: Climbs on spillover and technical buys

 

 

Chicago Board of Trade corn futures ended higher Tuesday, benefiting from spillover support from neighboring grains and technically inspired buying.

 

September corn ended 6 3/4 cents higher at US$3.38 1/2, and December finished 6 1/4 cents higher at US$3.55.

 

The market was up by default, with the absence of a major crop problem keeping futures in the role of a follower, said John Kleist of Kleist Ag Consulting.

 

Speculative buying was a featured attraction, as traders aren't in agreement on aggressively selling the market, Kleist added.

 

Solid underlying export demand remains a price-supportive influence, with news of fresh sales to unknown destinations and Iran providing a fundamental boost to the market, analysts add.

 

Meanwhile, improved crop ratings from USDA Monday applied mild pressure to limit upside movement, traders said. The active December future rose to its highest point in more than a week, but the inability of futures to overcome resistance at the bear defense area near its 50-day moving average took some edge off prices, analysts added.

 

Overall, the market staged a minor technical correction from a bearish theme, Kleist added. Crop scouts from the Pro Farmer Midwest Crop Tour touring fields in the eastern and western Midwest said conditions in the southeastern part of Nebraska look favorable for crop development. In the four fields sampled so far corn-yield estimates range from 137 bushels a acre in Polk County to 233 bushels, also in Polk County, with little disease or insect pressure seen so far.

 

In the eastern leg of the tour, corn yields improved on one tour route in Indiana that moved from central to the northwestern corner of the state. Scouts on one route of the eastern leg of the 2007 John Deere/Pro Farmer Midwest Crop Tour found an average corn yield of 150 bushels an acre in seven fields surveyed.

 

The DTN Meteorlogix weather forecast calls for additional heavy storms to bring more flooding concerns to the western and northern Midwest as the rest of the week unfolds. The southern Midwest and Delta crop areas remain in the grip of a hot and dry weather pattern, which has dominated the month of August. There is little immediate relief from this situation. Hot and dry weather continues over the southeast Midwest until a cold front arrives later this week.

 

In pit trades, Fimat bought 1,000 December and 600 July, Iowa Grain bought 1,000 December, ADM Investor Services bought 500 September and 300 December. Penson GHCO sold 1,000 December, and FCStonnee sold 300 September. Speculative fund buying was estimated at 6,000 contracts.

 

CBOT oat futures closed firmer on spillover support from the neighboring CBOT grain and soybean markets, floor traders said. September oats rose 2 cents to US$2.45 a bushel, and December oats ended 1 3/4 cents higher at US$2.52.

 

Ethanol futures closed lower. September ethanol finished .005 cent lower at US$1.724 a gallon, and October ethanol settled .024 cent lower at US$1.651.