October 26, 2006

 

CBOT Corn Review on Wednesday: Ends up but well below highs

 

 

Chicago Board of Trade corn futures settled higher Wednesday but well below new life-of-contract highs set earlier in the session. Trading was choppy as the market "remains highly volatile," a floor trader said.

 

December corn settled 2 3/4 cents higher to US$3.27 per bushel and March rose 3 1/2 cents to US$3.39 1/4. E-CBOT day-session volume in December was 52,166 contracts.

 

Modest commodity fund buying, along with sharply higher wheat futures, helped lead corn to new contract highs for the second session in a row early in the day. New contract highs were established through the September 2008 contract.

 

An early move higher in soybean futures also added to the firm tonnee, however, soybeans were unable to maintain the advances.

 

A sell-off in wheat futures after midday to negative territory helped trim the gains in corn, but the lack of strong selling interest limited the downside, sources said.

 

December wheat, which traded as high as US$5.41, settled 5 3/4 cents lower at US$5.16 3/4.

 

The market continues to rally on speculative buying interest, sources said. There has been a resurgence in news reports about the need to produce enough corn for ethanol which has led speculators into the corn market after they suffered losses in several other markets such as crude oil, gold, silver, heating oil, said John Kleist, with Top Third Ag Marketing in Chicago.

 

In corn, it's a "speculative inflation," he said. Corn's move to higher prices earlier in the fall was enough to "buy" the 3.5-4 million acres that corn needs for next year's demand, he adds.

 

The market is overbought, but there is not enough interest in selling for a correction to occur, a floor trader said.

 

December's 14-day Relative Strength index stands at 74.71.

 

Buyers Wednesday included Tenco, which bought 2,000 March; Man Financial, which bought 1,000 March; ADM Investor Services, which bought 500 March; and FC Stonnee, which bought 500 December and 400 July.

 

Calyon sold 2,000 December, FC Stonnee sold 800 December and 200 July, UBS sold 600 July, and Tenco sold 500 July.

 

Overall commodity fund selling was estimated at 3,000 contracts.

 

In options trading, Man Financial bought 8,000 March US$3.50 calls and sold 8,000 March US$3.80 calls.

 

Oat futures settled higher, shrugging off the decline in wheat futures from sharply higher levels as fund buying continued to support the market, a commission house analyst said.

 

December oats ended 2 3/4 cents higher at US$2.36 3/4 cents per bushel and March rose 3 1/4 cents to US$2.42 1/4.

 

Ethanol futures finished higher in modest trading. November settled 6.5 cents higher at US$2.18 per gallon. December gained 3.5 cents to US$2.15.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the week ending Oct. 19. Analysts expect sales between 700,000-1.0 million metric tonnes. Sales for the week ended Oct. 12 totaled 820,200 tonnes.