October 25, 2006

 

CBOT Corn Review on Tuesday: Higher; new contract highs set

 

 

Chicago Board of Trade corn futures ended higher Tuesday, establishing new life-of-contract highs in several months as speculative buying and the absence of strong selling interest combined to push prices higher, sources said.

 

December corn settled 6 cents higher at US$3.24 1/4 per bushel and March rose 5 1/2 cents to US$3.35 3/4. e-CBOT day session volume in December was 52,076 contracts.

 

New life-of-contract highs were set from December 2006 through September 2008.

 

"The market is going up a lot easier than it is down," said Vic Lespinasse of AG Edwards & Sons.

 

Fund and local buying helped establish the new highs, sources added.

 

"There is not an arms race but an acreage race between corn and soybeans," Lespinasse said. Corn needs millions of additional acres next year to provide enough supply to ethanol plants and other users, he added.

 

"Corn futures have a job to do and right now it is doing it," Lespinasse said.

 

Outside markets also provided some support with higher crude oil futures prices lending support to the market, with firm wheat values supportive, a floor trader said.

 

The market had little reaction to Monday's crop progress report. The U.S. Department of Agriculture reported that 53% of the U.S. corn crop was harvested, in line with analyst expectations, but below the 63% cut last year and the five-year average of 57%.

 

Some states were sharply below normal, with Ohio's harvest estimated at 18% versus the five-year average of 36%.

 

On daily open auction technical charts, December remained above its major moving averages. December's 14-day Relative Strength Index is 73.79.

 

Buyers Tuesday included JP Morgan, which bought 1,000 December 2007; Fimat which bought 800 July; ABN Amro, which bought 500 December; Rosenthal, which bought 500; and December and Citigroup, which bought 500 July.

 

Rand sold 6,000 December, ABN Amro sold 500 December, and FC Stonnee sold 400 December and 200 March.

 

Overall commodity fund selling was estimated at 3,500 contracts.

 

In options trading, Rand Financial bought 6,000 December US$3.70 calls, 6,000 December US$3.30 calls and 6,000 December US$3.40 calls. In addition, Rand sold 3,000 March US$3.30 calls and 3,000 March US$3.30 puts, also known as a straddle.

 

Oat futures ended moderately higher as light fund and technical buying boosted prices, sources said. The funds were light buyers, which pushed prices higher after early hedge-related selling faded, a floor trader said.

 

December oats settled 8 1/2 cents higher at US$2.34 per bushel and March gained 8 1/4 cents to US$2.39.

 

Ethanol futures settled moderately higher in thin volume. November ended 8 cents higher at US$2.115 per gallon. December rose 10 cents to US$2.115.