October 19, 2007

 

CBOT Corn Review on Thursday: Sets strong gains on spillover, technicals

 

 

Chicago Board of Trade corn futures settled higher Thursday and near session highs established in late trading on spillover buying from other markets, technical buying and fundamental news, analysts said.

 

December corn rallied 9 1/4 cents to end at US$3.67 1/4 per bushel.

 

Corn benefited from the lower U.S. dollar and the high price of crude oil, said Bill Nelson, associate vice president at A.G. Edwards & Sons in St. Louis. In early trading, the euro reached a fresh all-time high against the dollar.

 

In addition, weekly export sales were strong and above estimates, continuing the recent trend, and there was spillover support from stronger soybean prices, Nelson said.

 

Weekly corn export sales were 1.852 million tonnes, well above analyst estimates, and January soybeans settled 17 1/4 cents higher at US$10.10 1/4 per bushel.

 

Technical and speculative buying added to the gains, with December corn gapping open higher on daily open auction technical charts, trying to fill a downside gap created earlier in the month.

 

Overall fund buying was estimated at 7,000 contracts.

 

A rally in crude oil futures to another all-time high also provided support, with corn gaining as it is used as a feedstock for ethanol production. Nearby crude oil settled up US$2.07 per barrel at US$89.47.

 

Market direction on Friday will depend on how much follow-through buying occurs in overnight trading, the direction of the dollar and what crude oil does, a commission house analyst said.

 

On daily technical charts, electronically traded December finished above most of its major moving averages except for the 200-day moving average.

 

In open auction trading, RJ O'Brien bought 500 March and Rand Financial bought 500 December.

 

In options trading, Penson GHCO sold 1,500 December US$3.30 calls and MF Global bought 6,000 December US$3.20 puts.

 

Oat futures settled higher with light fund buying and spillover support from corn boosted oat values, an analyst said.

 

December oats rose 3 1/4 cents to US$2.82 per bushel.

 

Ethanol futures finished with light gains in quiet trading. November ethanol ended 1.9 cents higher to US$1.650 per gallon and December also settled up 1.9 cents at US$1.650.