October 16, 2007

 

CBOT Corn Review on Monday: Rallies on energy prices, technical buying

 

 

Chicago Board of Trade corn futures settled higher Monday as spillover from surging energy futures prices as well as follow-through buying from Friday and speculative technical buying boosted prices, analysts said.

 

December corn settled 11 cents higher to US$3.62 per bushel.

 

A rally in crude oil above US$86 per barrel during day session trading lent support to commodities almost across the board, a trader said. Nearby crude oil ended up US$2.47 per barrel at US$86.16.

 

"Corn is relatively inexpensive to wheat and soybeans and was supported by wheat/corn spread unwinding," said Sid Love, analyst with Kropf & Love Consulting in Overland Park, Kan.

 

December wheat fell 24 cents to US$8.33 1/2 per bushel after trading limit down earlier in the session.

 

Speculative technical buying added to the gains with an island top in December futures on technical charts almost negated, said John Kleist of Kleist Ag Consulting in Arlingtonne Heights, Ill. On daily technical charts, December traded at its highest level since Oct. 2 and above most of its major moving averages.

 

In addition to the rally in crude oil, reports that the European Union would allow three varieties of GMO corn to be imported provided strength to prices, though the majority of the rally was connected to the gains in crude oil, a trader said.

 

The market had little reaction to the weekly export inspections report released during the session. The U.S. Department of Agriculture reported that 40.527 million bushels of corn were inspected for the week ended Oct. 11, within the range of analyst estimates but below the 45.673 million bushels inspected last week.

 

In open auction trading, JP Morgan bought 500 July, and Fortis bought 800 December.

 

Commodity fund buying was estimated at 6,000 contracts.

 

In options trading, Rand bought 500 December US$3.50 calls and Iowa Grain bought 300 December US$3.40 puts.

 

Oat futures ended with thin gains in light trade, stuck between sharply lower wheat values and the rally in corn prices, a local trader said.

 

December oats settled 1 cent higher at US$2.78 per bushel.

 

Ethanol futures finished with modest gains. November ethanol rose 2.5 cents to US$1.60 per gallon and December also ended 2.5 cents higher at US$1.60.

 

On Monday afternoon, the USDA is scheduled to release the weekly crop progress report at 4 p.m. EDT. Analysts expect 50%-55% of the U.S. corn crop to be harvested as of the week ended Oct. 14.