September 28, 2007

 

CBOT Corn Review on Thursday: Sharply higher on technical strength

 

 

Chicago Board of Trade corn futures settled with strong gains Thursday, benefiting from good-sized technical buying, spillover from wheat and soybeans and inflationary-type buying, analysts said.

 

December settled 11 3/4 cents higher at US$3.86 3/4 per bushel and March gained 11 1/2 cents to US$4.02 1/4.

 

"Corn had some pretty strong technical support with December trying to reach an upside gap objective of US$3.95 per bushel on daily open auction technical charts," said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

End-user buying and technical short covering added to the gains, said Roose.

 

Sharp rallies in both wheat and soybeans added to the gains with wheat making new all-time highs and soybeans setting new life-of-contract highs, a commission house analyst said.

 

December wheat jumped 15 3/4 cents to US$9.33 per bushel and November soybeans gained 18 1/4 cents to US$10.09.

 

Fundamental news was also supportive with corn export sales above analysts' estimates, providing additional strength, the analyst said. The U.S. Department of Agriculture reported that corn weekly export sales for the week ended Sept. 20 totaled 1.7 million metric tonnes, above the 600,000 to 1.4 million tonnes expected by analysts.

 

Strong gains in other commodities, notably crude oil, added support on inflation-type buying, an E-CBOT trader said.

 

Price direction on Friday will depend on a number of factors, a floor trader said. It's the end of the month and the quarter so there could be some squaring of positions. However, there is a quarterly grains stocks report and a wheat production report due that could influence price direction, the trader said.

 

The average quarterly corn stocks estimate for the fourth quarter of 2006-07 crop year was 1.147 billion bushels, according to a survey of 12 analysts, compared to the 1.142 billion-bushel carryover estimated by the USDA in the September supply and demand report.

 

The quarterly stocks report is scheduled for release Friday at 8:30 a.m. EDT (1230 GMT).

 

On daily technical charts, electronically traded December corn settled above its major moving averages and at its highest level since June 21.

 

Commodity fund buying was estimated at 6,000 contracts.

 

In options trading, MF Global bought 2,000 December US$4.10 calls and sold 800 December US$3.70 calls. Tenco bought 5,000 December US$3.70 puts and sold 5,000 December US$4.10 calls.

 

Oat futures settled higher on spillover from the rest of the grains with the weak U.S. dollar also supplying support, a trader said. Most oats in the U.S. are imported from Canada and the weak U.S. currency is supporting oat prices, the trader said.

 

December oats settled 4 1/4 cents higher at US$2.85 3/4 per bushel.

 

Ethanol futures finished higher in light trade. October ethanol settled 3.4 cents higher at US$1.549 per gallon and November gained 2.1 cents to US$1.521.