October 10, 2006

 

CBOT Corn Review on Monday: Surges; new highs set on wheat, funds

 

 

Chicago Board of Trade corn futures settled sharply higher in active trading Monday as spillover buying from soaring wheat values along with fund and technical buying pushed prices to new contract highs from spot-month December through contracts expiring in 2008.

 

December corn scored a new life-of-contract high at US$2.91 per bushel and traded limit-up, 20 cents higher, in late trade before settling slightly below that level.

 

December corn surged 18 1/2 cents higher to US$2.89 1/2 cents per bushel, and March also rallied 18 1/2 cents to US$3.02 1/2.

 

In the last 10 minutes of the session, trading of corn on e-CBOT was halted as the December contract reached limit-up on the system. E-CBOT day- session volume in December was 63,003 contracts.

 

Concerns over the size of Australian wheat crop led to world supply concerns and wheat futures traded limit-up, with spillover buying interest catapulting corn futures higher.

 

"Corn followed wheat and it appeared that people were buying wheat in the corn pit," said Vic Lespinasse of AG Edwards & Sons. Seasonally this is the time of the year when corn should be going lower, he added.

 

Technical buying and fund purchases also added to the upside moves as corn continued its contra-seasonal rally, sources said.

 

It was the rally in wheat that led corn higher with fund and technical buying extending the gains, a floor trader concurred.

 

Commodity fund buying was estimated at 10,000 contracts.

 

There was little fresh fundamental news out Monday, with the USDA closed in observance of Columbus day.

 

On open auction technical charts, 2006 December gapped open higher and traded at its highest levels. December's 14-day relative strength index stands at 74.14. - Buyers on Monday included Fortis, which bought 3,000 December; Tenco, which bought 1,000 December, 500 March and 500 July; Man Financial, which bought 1,000 December; JP Morgan, which bought 1,500 December; and Fimat, which bought 1,000 December.

 

Goldenberg-Hehmeyer sold 2,000 December, JP Morgan sold 1,000 December and 1,000 July and UBS sold 500 December and 400 July.

 

In options trading, Man Financial bought 3,500 December US$3.10 calls, and bought 1,500 December US$2.90 calls. Tenco bought 2,000 December US$2.50 puts and sold 4,000 December US$3.30 calls.

 

Oat futures settled sharply higher, as spillover buying from wheat and corn boosted prices with new life-of-contract highs set in several months. The rally in wheat and corn supported oats with fund and technical buying adding to the gains, a local trader said.

 

December oats jumped 10 3/4 cents to US$2.27 per bushel and March rose 12 cents higher to US$2.34.

 

Ethanol futures ended higher in thin trade. November ethanol ended up 3 cents at US$1.89 per gallon and December, which did not trade, rose 3.5 cents to US$1.885.

 

On Tuesday, the U.S. Department of Agriculture is scheduled to release the week weekly export inspections report at 10 a.m. CDT and the weekly crop progress report at 3 p.m. CDT (2000 GMT).