September 13, 2007

 

CBOT Corn Review on Wednesday: Sharply higher, buoyed by soybeans

 

 

Chicago Board of Trade corn futures finished with strong gains Wednesday despite larger-than-expected crop production and supply demand reports from the USDA, analysts said.

 

September corn rallied 15 1/4 cents to US$3.39 3/4 per bushel, December also rose 15 1/4 cents to US$3.56 1/2 and March also settled 15 1/4 cents higher at US$3.73.

 

"Corn got the production and stocks that were exactly what the market was looking for," said Tim Hannagan, senior grain analyst at Alaron Trading.

 

The U.S. Department of Agriculture estimated 2007-08 U.S. corn production at 13.308 billion bushels, above the average guess of 13.128 billion and well above the 13.054 billion estimated in August.

 

However, soybean production was below last month's estimates and soyoil ending stocks were sharply lower, and as a result, corn was a follower of soybeans, Hannagan said.

 

Last year was the year of ethanol, and this coming year is about soybeans finding enough acres to supply bio-diesel, Hannagan said. As a result, corn has a mission to make sure that prices remain high enough to not give back all the acres it gained this year. "Corn is the tail of the dog," and soybeans are now the leader, said Hannagan.

 

November soybeans rallied 18 cents to 9.38 1/2 per bushel.

 

Speculative buying and the unwinding of long-wheat short corn spreads also supplied support to corn while pushing wheat sharply lower, an E-CBOT trader said.

 

December wheat settled 30 cents lower at US$8.60 1/2 per bushel, after trading sharply higher earlier and setting a new all-time high in overnight trading.

 

Commodity fund buying was estimated at 10,000 contracts.

 

Price direction in corn futures depends on what happens to wheat futures in overnight trading, an E-CBOT trader said.

 

On daily technical charts, electronically traded December corn settled above most major moving averages but remained within its recent trading range.

 

In open auction trading, ADM Investor Services bought 500 December, Fimat bought 700 December, and RJ O'Brien sold 1,000 December.

 

In options trading, RJ O'Brien sold 2,000 October US$3.40 calls, MF Global sold 3,000 October US$3.30 puts, and UBS bought 2,000 December 2008 US$6.00 calls.

 

Oat futures settled higher, boosted by spillover strength from corn and speculative buying, a floor trader said.

 

December oats gained 6 1/2 cents to US$2.76 3/4 per bushel and March rose 8 cents to US$2.87.

 

Ethanol futures ended mostly lower in light trade. October ethanol fell .005 cent to US$1.588 per gallon and November declined .004 cent to US$1.58.

 

Thursday, the USDA is scheduled to release the weekly export sales report for the week ended Sept. 6. Analysts expect sales between 650,000-1.2 million metric tonnes.