October 7, 2006

 

CBOT Corn Review on Friday: Mostly lower on spread liquidation

 

 

Chicago Board of Trade corn futures settled mostly lower Friday as bear market spread unwinding kept prices on the defensive, floor sources said.

 

December corn settled 3/4 cent lower at US$2.71 per bushel, and March gained 3/4 cent to US$2.84. e-CBOT day session volume in December was 45,094 contracts.

 

Participants continue to trim their exposure in the deferred contracts, a commission house analyst said.

 

The spread activity has been brisk the last couple of days, said Shawn McCambridge, senior grain analyst at Prudential Financial in Chicago. Technically and fundamentally, there is no explanation for the strength in the front end of the market.

 

Farmers are looking at favorable weather for harvest this weekend and futures are overbought at this point. At these price levels, farmers will continue to sell particularly in areas of good production and short storage space, he added.

 

The feature in corn continued to be bear spread liquidation, a commission house analyst agreed.

 

On open auction technical charts, December traded an inside day, within the range established in Thursday's trade. December's 14-day Relative Strength Index stands at 64.56.

 

Buyers Friday included JP Morgan, which bought 500 December; Man Financial, which bought 500 December; and Fimat, which bought 300 December.

 

UBS sold 600 March; JP Morgan sold 200 December; and ADM sold 200 December.

 

In spread trading, Fortis bought 3,500 March-July and 1,000 March-December 2007.

 

In options trading, Man Financial bought 2,000 December US$2.50 puts, and sold 2,000 December US$2.60 calls.

 

Commodity fund buying was estimated at 500 contracts.

 

Oat futures ended with modest gains as light commission house and market on close buying helped support prices, a commission house analyst said. Both December and March set new contract highs.

 

December oats rose 3 cents to US$2.16 1/4 per bushel and March settled 2 cents higher to US$2.22.

 

Ethanol futures settled higher in light trade. November ethanol, which did not trade, gained 2.5 cents to US$1.86 per gallon and December rose 7 cents to US$1.85.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the latest Commitments of Traders Report for the period ending Oct. 3.

 

On Monday, the U.S. Department of Agriculture is closed in observance of Columbus Day. The weekly export inspections and crop progress reports, normally released Mondays, are scheduled for release Tuesday.