October 12, 2006

 

CBOT Corn Review on Wednesday: Settles higher on wheat spillover

 

 

Chicago Board of Trade corn futures ended with moderate gains Wednesday as spillover support from wheat pushed corn futures higher.

 

December corn gained 8 1/2 cents to US$2.84 per bushel, and March rose 6 cents to US$2.94. e-CBOT day session volume in December was 66,958 contracts.

 

"Corn's rally was wheat related," said Brian Hoops, president of Midwest Markets in Yanktonne, S.D.

 

Wheat was limit up on news reports that the Australian Wheat Board wouldn't export wheat from the eastern half of the country because of drought this year, Hoops said.

 

In addition, the wheat-corn spread is at the widest it has been in recent memory and corn will continue to follow the wheat, he added.

 

Light position-squaring after Tuesday's losses and ahead of Thursday's U.S. Department of Agriculture crop production and supply-demand reports also provided support, floor sources said.

 

In a survey conducted by Dow Jones Newswires, the average of 21 analysts' forecasts for 2006-07 corn production is 11.144 billion bushels, 30 million bushels above the USDA September estimate.

 

The average estimate of the crop's yield by 20 analysts was pegged at 155.2 bushels per acre, one-half of a bushel higher than the USDA's 154.7 September estimate.

 

The average of 14 analysts' estimates for 2006-07 ending stocks is 1.207 billion bushels, 13 million bushels below the 1.220 billion estimated in September by the USDA.

 

The reports are scheduled for release at 7:30 a.m. CDT Thursday.

 

Fund buying also supported futures, a floor analyst said. Overall commodity fund buying was estimated at 6,500 contracts.

 

On open auction technical charts, December remained above most major moving averages. December's 14-day relative strength index stands at 64.90, above Tuesday's 60.75 level. A reading above 70 denotes overbought levels and a reading below 35 indicates oversold conditions.

 

Buyers Wednesday included Fortis, which bought 2,000 December; Fimat, which bought 1,000 December; Calyon, which bought 1,000 December; and FC Stonnee, which bought 500 December.

 

Fimat sold 800 July and 500 December; JP Morgan sold 1,500 December; Rand sold 500 July; and UBS sold 500 December.

 

In options trading, FC Stonnee bought 2,000 December 2007 US$3.20 calls and sold 2,000 December 2007 US$4.20 calls and 2,000 December 2007 US$2.90 puts.

 

Oat futures settled with strong gains as spillover strength from corn and wheat futures pushed prices higher, sources said. New life-of-contract highs were set in December and March.

 

December oats jumped 11 1/4 cents to US$2.31 1/2 per bushel and March gained 9 1/2 cents to US$2.36 1/2.

 

Ethanol futures ended modestly lower in light trade. November ethanol fell 4.5 cents to US$1.85 per gallon and December declined 7.5 cents to US$1.80.