October 10, 2007

 

CBOT Corn Review on Tuesday: Up on position squaring, strong soybean rally

 

 

Chicago Board of Trade corn futures ended higher Tuesday but well off session highs. Support came from position squaring after recent losses and spillover buying from a rally in soybean futures, analysts said.

 

December corn settled 2 3/4 cents higher at US$3.42 1/2 per bushel, with March ending up 3 1/4 cents at US$3.59 1/2.

 

"Over the past week the corn market has had a hard break and some participants decided to even up their short positions ahead of the U.S. Department of Agriculture's production and supply/demand reports," said Dale Durchholz, an analyst at AgriVisor in Bloomingtonne, Ill.

 

The average production estimate for the 2007-08 crop year was 13.459 billion bushels, according to a survey of 24 analysts by Dow Jones Newswires, 151 million bushels above the 13.308 billion estimated by the USDA in September.

 

The average yield estimate for the 2007-08 crop year was 157.7 bushels per acre, according to 23 analysts surveyed, compared the 155.8 bushels estimated in September by the USDA.

 

Scattered talk that the government might increase corn's planted and harvested acreage did not have much impact, Durchholz said. In last year's October report, the USDA cut the planted and harvested acreage, but "no one knows what the USDA will do, or if they even do anything on Friday," said Durchholz said.

 

The sharp rally in soybean futures added to the firm tonnee in corn, with November soybeans gaining 24 3/4 cents to US$9.50 1/4 per bushel.

 

Near the close, nearby wheat futures sold off, with corn giving back some of its earlier gains in sympathy, an analyst said.

 

Corn prices Wednesday will depend upon what happens in soybeans and wheat as corn continues to follow the other grains to a large extent, a trader said.

 

Commodity fund buying was estimated at 5,000 contracts.

 

In options trading, Fortis bought 1,000 March US$3.70 puts.

 

Oat futures settled modestly higher in quiet trading as spread activity was the feature, a trader said. Commission houses were rolling out of December and into March, the trader noted.

 

December oats gained 1 cent to US$2.71 1/2 per bushel.

 

Ethanol futures ended higher in thin trade. November ethanol rose 1 cent to US$1.555 per gallon and December also gained 1 cent to US$1.555.

 

Tuesday afternoon the U.S. Department of Agriculture is scheduled to release the weekly crop progress report.