October 26, 2007

 

CBOT Corn Review on Thursday: Sharply higher on crude oil rally

 

 

Chicago Board of Trade corn futures settled sharply higher Thursday and near session highs, boosted by strong gains in energy markets and technical buying, analysts said.

 

December corn settled 9 3/4 cents higher at US$3.66 1/4 per bushel.

 

Corn's rally was "crude oil and technically related," said Dan Basse, president of AgResource in Chicago. "Corn rallied on the macro picture with a bio-crop like corn following along with crude oil," said Basse. Nearby crude oil rallied sharply higher ending over US$90.00 a barrel.

 

Corn was supported by the positive technical tonnee, moving above short-term resistance levels, a trader said. Nearby electronically traded December moved above its 10-day and 20-day moving averages, settling at its highest level in almost a week.

 

Strong gains in soybeans also added to the strength in corn, an analyst said. January soybeans surged 18 3/4 cents to US$10.12 1/2 per bushel.

 

"Even though producers are still harvesting this years' U.S. crop, corn needs to keep pace with the other grains in order to ensure that its acreage next year does not decline dramatically," said Vic Lespinasse, an analyst at Illinois Grain.

 

A strong weekly export sales report also provided support as good demand for U.S. corn from foreign buyers continues as the dollar weakens, he said.

 

The U.S. Department of Agriculture reported weekly corn export sales were 1.548 million metric tonnes for the week ended Oct. 18, above the 950,000-1.4 million tonnes expected by analysts.

 

Corn's price direction Friday will depend on what happens to the energy markets and the dollar in overnight activity, a commission house analyst said.

 

In open auction trading commodity fund buying was estimated at 6,000 contracts.

 

In options trading, Tenco bought 1,000 March US$3.90 puts and sold 1,000 December US$3.90 puts.

 

Oat futures ended higher on spillover from corn and higher outside markets. Oats traded lower early in the session as light technical sell stops pressed the market but the strength in outside markets and corn helped reverse the market's direction, a trader said.

 

December oats settled 3 1/2 cents higher at US$2.78 per bushel.

 

Ethanol futures settled modestly higher. November ethanol rose 3 cents to US$1.76 per gallon and December rallied 3.6 cents to US$1.73.