September 19, 2006

 

CBOT Corn Review on Monday: Bounces to two-week highs on speculative buys

 

 

Chicago Board of Trade corn futures ended Monday's session posting solid gains, rallying to two-week highs on speculative buying.

 

December ended 6 cents higher at US$2.47 3/4 cents per bushel, and March gained 6 cents to US$2.61 1/2. E-CBOT day-session volume in December was 57,048 contracts.

 

Weather-related concerns associated with harvest delays and lingering uncertainty over a potential midweek frost in the Midwest provided a spark to extend Friday's price strength, analysts said.

 

Technically inspired buying was supportive to prices also, as futures gapped above chart resistance, with sellers forced to cover recently placed shorts in the market, traders added.

 

The supportive theme was consistent from the outset, with futures bouncing to two-week highs. The market managed to put a little risk premium back in the market, gapping above near-term technical resistance on technical charts. However, with meaningful resistance levels continuing to hover above prices, traders say fundamental support will be needed to sustain a rally heading into the heart of the fall harvest.

 

The DTN Meteorlogix forecast said rainfall Monday of up to one inch in the eastern and southeastern Midwest will give way to mainly dry conditions Tuesday and Wednesday. The second major rain system of the week moves into the western belt Thursday and Friday, and into eastern areas Friday and Saturday. Rainfall will range up to 1 1/2 inches, with locally heavier amounts. Almost the entire Midwest will be under this rainfall.

 

The eastern Midwest will turn much cooler Tuesday and Wednesday, with lows dipping into the 30s to low-40s Fahrenheit. Some frost or light freezing is expected in the Dakotas, Minnesota, northern Iowa and Wisconsin. This persistent wet and cool weather pattern will delay harvest progress due to slow ripening and dry-down of crops, and muddy field conditions, Meteorlogix reports.

 

After the close, U.S. Department of Agriculture is scheduled to release its weekly crop progress report 3 p.m. CDT. Analysts anticipate crop ratings to hold steady. In pit trades, Fortis bought 2,000 December, JP Morgan bought 1,200 December, and FCStonnee, Man Financial and Shatkin/Arbor each bought 500 December. JP Morgan and Fortis each sold 600 December, Fimat sold 700 December, and Citigroup and Man Financial each sold 400 December, with ADM Investor Services a seller of 400 July.

 

Speculative fund selling was estimated at 6,500 contracts.

 

Ethanol futures moved lower Monday. The October ethanol contract settled 1 1/2 cents lower at US$1.845 per gallon.

 

Oat futures ended steady to higher Monday, with December oats ending 3/4-cent higher at US$2.01 1/4 per bushel.