October 14, 2006

 

CBOT Corn Review on Friday: Ends sharply higher as rally continues

 

 

Chicago Board of Trade corn futures soared Friday, surging to new-life-of-contract highs in some months as the market continued its recent rally.

 

December corn jumped 16 1/4 cents to US$3.14 1/2 cents per bushel, and March rose 15 3/4 cents to US$3.24. e-CBOT day session volume in December was 66,420 contracts.

 

On weekly continuous charts, nearby corn is at its highest level since June 2004.

 

"Everything is going corn's way," said Bill Nelson, assistant vice-president with AG Edwards & Sons in St. Louis.

 

Corn futures digested Thursday's news of lower U.S. production and ending stocks data, and some participants anticipate another cut in production in November, which would further tighten the balance sheet, he added.

 

The continued rally in wheat futures and higher outside markets also lent support, a floor trader said. Crude oil was higher and that helped corn on the ethanol angle, he added.

 

Once corn held above US$3.00, that brought a lot of speculative interest into the market, an e-CBOT trader said. With wheat above US$5.25, corn has to go higher in order to attract the acres needed next year, he said.

 

Better-than-expected weekly export sales also provided support to the market, the floor trader noted.

 

The U.S. Department of Agriculture reported weekly corn export sales at 1.286 million metric tonnes for the week ended Oct. 5, above the 800,000-1.0 million tonnes expected by analysts.

 

On open auction technical charts, December remained well above its major moving averages.

 

December's 14-day relative strength index stands at 75.36. A reading above 70.0 denotes overbought levels and a reading below 35.0 indicates oversold conditions.

 

Buyers Friday included Iowa Grain, which bought 1,000 March, 700 December and 700 July, Man Financial, which bought 700 December and JP Morgan, which bought 500 December 2007.

 

Overall commodity fund buying was estimated at 9,000 contracts.

 

ADM Investor Services sold 700 December, JP Morgan sold 700 March and 400 July, Fimat sold 600 December 2007 and Fortis sold 500 July.

 

In spread trading, ADM, UBS and Fimat each bought 700 December-March. JP Morgan bought 4,000 March-December.

 

In options trading Man Financial 2,000 March US$3.10 calls and sold 2,000 March US$3.50 calls and 2,000 March US$2.60 puts.

 

Oat futures ended modestly lower as early light buying interest faded and light profit taking occurred, sources said. Once December couldn't move above US$2.48, the 2002 high on a continuous chart, that opened the door for profit taking, a commission house analyst said.

 

December oats declined 3 3/4 cents to US$2.36 1/2 cents per bushel and March fell 2 1/4 cents to US$2.42 3/4.

 

Ethanol futures settled higher in light trade. November ethanol settled 3 cents higher at 1.88 per gallon and December gained 1.5 cents to US$1.865.

 

Friday, afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders repot for the period ending Oct. 10.

 

On Monday, the USDA is scheduled to release the weekly export inspections at 10:00 a.m. CDT and the weekly crop progress report at 3:00 p.m. CDT (2000 GMT).