October 27, 2006

 

CBOT Corn Review on Friday: Higher on spillover, light speculative buying

 

 

Chicago Board of Trade corn futures settled higher Friday but off of new life-of-contract highs reached earlier in the session in choppy trading activity.

 

December corn settled 5 1/2 cents higher at US$3.32 1/2 per bushel and March rose 5 cents to US$3.44 1/2. e-CBOT day session volume in December was 38,217 contracts.

 

Corn was supported initially by a sharply higher opening in wheat futures and spillover strength from overnight gains, a floor source said.

 

The inability of wheat to maintain those gains pressured corn to give up most of its early strength, he added.

 

Corn was supported by the sale of corn to unknown destinations after wheat retreated, said Brian Hoops, president of Midwest Market Solutions in Yankton, S.D.

 

Before the opening, the U.S. Department of Agriculture reported the sale of 120,000 metric tonnes of corn to unknown destinations for delivery in the 2006-07 crop year.

 

In addition, corn drew support from soybeans, which rallied close to last week's highs and enabled corn to post new life-of contract highs, Hoops said.

 

January soybeans rose 7 1/4 cents to US$6.49 per bushel, while December wheat ended up 1 cent at US$5.08 1/2, after trading as high as US$5.23 on the opening.

 

It looks as if corn was caught between the beans, which are trying to go higher, and weaker wheat values along with the technical resistance December corn is running into around the US$3.35 area, he said. The wheat market is starting to lose some steam, he added.

 

On daily open auction technical charts, December remained well above its major moving averages and its 14-day Relative Strength index ended at 76.61.

 

Buyers Friday included ADM Investor Services, which bought 500 December, JP Morgan, which bought 500 December and 400 July, Tenco, which bought 500 March, and Fortis, which bought 500 December as one leg of a corn-wheat spread.

 

Citigroup sold 1,000 December, Fimat sold 500 July, and Tenco sold 200 March.

 

Overall commodity fund buying was estimated at 4,000 contracts.

 

Oat futures ended moderately higher as light fund buying boosted prices with additional support coming from higher corn futures, floor sources said. Fimat and UBS were noted as buyers with UBS buying the Mar-Dec spread.

 

December oats rallied 6 cents to US$2.40 1/2 cents per bushel and March gained 7 3/4 cents to US$2.48 3/4.

 

Ethanol futures settled lower for the second straight session in modest trading. November dropped 7.4 cents to US$2.04 per gallon. December fell 4.7 cents to US$2.03.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the latest Commitments of Traders Report for the period ending Oct. 24.

 

On Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10 a.m. CDT and the weekly crop progress at 3 p.m. CDT.