September 8, 2007

 

CBOT Corn Review on Friday: Higher on fund buying, weak dollar

 

 

Chicago Board of Trade corn futures finished higher Friday, boosted by fund buying, short covering ahead of the weekend and a weaker U.S. dollar, analysts said.

 

September corn gained 8 cents to US$3.31 1/4 per bushel, December rose 8 1/4 cents to US$3.47 1/2 and March settled 8 1/4 cents higher to US$3.64.

 

Commodities in general were higher on the weakness in the U.S. dollar, and the weakness led to fund buying, said Jason Britt, an analyst at Central States Commodities in Kansas City. Ideas that a weaker U.S. currency will lead to higher U.S. exports, including corn, helped underpin prices, said Britt.

 

Commodity fund buying was estimated at 9,000 contracts.

 

Short covering ahead of the weekend after recent market volatility also added support, an E-CBOT trader said. Some participants evened up their positions after an early move to lower levels stalled and there is a crop report next week, so people trimmed their positions, the E-CBOT trader said.

 

Spillover from sharply higher wheat futures also contributed to the strength in corn. December wheat settled 19 1/2 cents higher at US$8.43 1/2.

 

"Either wheat is too high or corn is too low and that idea probably put a bid in the market," said Britt.

 

The market shrugged off a production estimate ahead of the opening of day session trading from Allendale, a research and brokerage firm. Allendale sees the 2007-08 U.S. corn crop at 13.416 billion bushels with a yield of 157.1 bushels per acre.

 

Weekly corn export sales were termed solid but had little market impact, a trader said. The U.S. Department of Agriculture reported that corn weekly export sales for the period ended Aug. 30 were 1.116 million metric tonnes. Included in the total were sales of 260,300 tonnes for delivery in the 2006-07 marketing year.

 

Price direction on Monday will depend on the weather forecasts and if the weather limits early harvest activity, a trader said. Corn will also be watching the wheat market and what direction it takes on Sunday night, the trader said.

 

On daily technical charts, electronically traded December settled above several major moving averages but under its 100-day and 200-day moving averages.

 

In open auction trading, Rosenthal bought 600 September and 500 December and Citigroup sold 300 December.

 

In options trading, MF Global bought 2,000 October US$3.10 puts and RJ O'Brien bought 1,000 October US$3.40 calls and sold 1,000 March US$3.10 puts.

 

Oat futures ended higher as light fund buying and spillover strength from stronger wheat futures despite light hedge-related selling, an analyst said.

 

September oats settled 2 1/2 cents higher at US$2.53 1/2 per bushel and December rose 3 1/4 cents to US$2.63 3/4.

 

Ethanol futures ended mixed in very light trade. October ethanol settled .001 cent higher at US$1.54 per gallon and November slipped 1 cent to US$1.57.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the weekly commitments of traders report for the period ended Sept. 4.