September 8, 2006

 

CBOT Corn Review on Thursday: Up; speculative buying reverses losses

 

 

Chicago Board of Trade corn futures ended higher Thursday as speculative buying helped support the market and as December rallied after holding at technical support levels below US$2.40, sources said.

 

September corn gained 4 1/4 cents to US$2.30 3/4 per bushel, with December settling up 5 cents at US$2.45 3/4. E-CBOT day session volume in December was 51,360 contracts.

 

The inability to trade below technical support near US$2.38 in December helped the market rebound from lower levels, sources said.

 

Corn fell below US$2.40 but couldn't trade beneath US$2.38, and when the market held above that level, it encouraged buying interest, a commission house analyst said.

 

Market technicians got a little scared when December held support and buying accelerated after December climbed above US$2.41, said Mike Zuzolo, chief analyst at Risk Management Commodities in Lafayette, Ind. In addition, it appeared that some market participants were unwinding their long wheat-short corn spreads, he added.

 

Local short covering and position squaring ahead of next week's U.S. Department of Agriculture production and supply and demand reports also provided support, floor sources said.

 

In a Dow Jones Newswires survey of 20 analysts, the average 2006-07 corn production estimate was 10.996 billion bushels, slightly higher than the USDA's 10.976 billion estimate in August. The average yield estimate was 152.5 bushels per acre, slightly higher than the 152.2 bushels forecast in August. In a Dow Jones Newswires survey of 14 analysts, the average of 2006-07 corn ending stocks estimate was 1.221 billion bushels, 11 million lower than the 1.232 estimated by the USDA in the August supply and demand report. The average ending stocks estimate of the 2005-06 crop was 2.046 billion bushels, 16 million bushels below the 2.062 forecast by the USDA in August.

 

The USDA is scheduled to release its September crop production report on Tuesday at 7:30 a.m. CDT.

 

Buyers Thursday included Fimat, which bought 1,000 December; Rand Financial, which bought 700 December; Fortis, which bought 600 December; and JP Morgan, which bought 500 December.

 

UBS sold 2,000 December, Prudential sold 1,000 December, ABN Amro sold 900 December, and JP Morgan sold 500 December.

 

Overall commodity fund selling was estimated at 1,000 contracts.

 

In options trading JP Morgan bought 3,000 December US$3.00 calls, 3,000 December US$3.10 calls and 2,000 December US$3.20 calls.

 

Oat futures ended modestly lower Thursday as light commission house selling weighed on the market, a floor trader said. September oats finished 2 cents lower at US$1.86 per bushel and December slipped 1 cent to US$1.92 1/2.

 

Ethanol futures settled mixed in quiet trade. October ethanol settled unchanged at US$2.08 cents per gallon and November rose 1.5 cents to US$2.08.

 

On Friday, the USDA is scheduled to release the weekly export sales report for the week ended Aug. 31 at 7:30 a.m. CDT. Analysts expect corn export sales between 900,000-1.4 million metric tonnes.