August 24, 2006

 

CBOT Corn Review on Wednesday: Up on sector strength, speculative buys

 

 

Strength across the grain sector and speculative buying sent corn futures at the Chicago Board of Trade higher on Wednesday.

 

Most active December corn gained 4 cents to US$2.40 a bushel.

 

Funds bought about 6,000 contracts of corn, helping spur a rally, analysts said.

 

Furthermore, ideas that the market is bottoming after recent moves to contract lows helped corn out of the gate early Wednesday. A floor-wide rally in CBOT markets lifted all contracts, with wheat, soybeans and rice stronger.

 

"I think we can attribute some gains on ideas we're building export demand here," said a long-time grains analyst. "Plus it's the first time in 12 days December corn got over the 12-day moving average, so it had a little technical (chart) help."

 

The rally in December corn took the market to its highest level since Aug. 11. A technical analyst, however, pointed out bulls need a close above US$2.42 to change momentum.

 

On Thursday, the U.S. Department of Agriculture is set to release weekly exports sales. A survey of analysts estimate old-crop corn business at 200,000 to 400,000 metric tonnes and new-crop sales at 900,000 to 1.5 million tonnes.

 

Some analysts said with corn yields out of the eastern leg of the 2006 John Deere/Pro Farmer Midwest crop tour coming out lower than expected, the market bulls finally have some friendly news.

 

Illinois corn output appears to be on track to rebound sharply this season, compared to the drought-stricken 2005 harvest, say scouts on one route of the eastern leg tour. Crop scouts estimated average corn yields of 146.74 bushels per acre in the central part of the state, up 24 bushels from tour forecasts generated from the same section of the state in 2005.

 

Corn yield potential in southwestern Iowa is "better than expected," crop scouts on the western leg of the said Wednesday. Based on six survey stops so far Wednesday morning, crop scouts found corn yields ranging from 131-180 bushels per acre.

 

"I'm not sure I believe this bit about corn rallying due to disappointing prospects in Indiana. If that was the case, then they should love Iowa and Illinois. The funds were here Wednesday and that helped everything," the long-time analyst said.

 

Bell Enterprises Inc., a privately owned group of grain elevators in Illinois, on Wednesday forecast 2006 central Illinois corn yields at 168.86 bushels per acre. Bell's prediction was based on its corn yield tour of Mclean, Woodford and Tazewell counties in central Illinois, in which 216 samples were taken from 108 fields surveyed.

 

Buyers included Iowa Grain buying 1,000 December; Man Financial buying 300 December; O'Connor buying 1,000 December and 1,000 July; Prudential buying 500 December; and Rand and Tenco each buying 300 December. Sellers included ADM and ABN Amro each selling 300 December; FIMAT selling 400 December; and R.J. O'Brien selling 300 September

 

J.P. Morgan spread 1,000 September-December.