November 7, 2007

 

CBOT Corn Review on Tuesday: Up sharply on speculative buying, outside markets

 

 

Chicago Board of Trade corn futures ended with strong gains Tuesday, as speculative buying pushed prices higher after outside energy and metals markets posted large gains.

 

December rose 10 1/2 cents to US$3.85 3/4 a bushel.

 

Nearby crude oil futures posted another record high, and gold and silver also settled sharply higher. December crude oil jumped US$2.72 cents to US$96.70 a barrel and December gold jumped US$13.20 to US$823.40 an ounce.

 

Inflationary buying cut across most commodities and the grains were no exception, a trader said.

 

The corn market also benefited from the weakness in the U.S. dollar, said Jason Britt, broker and analyst at Central States Commodities in Kansas City. The dollar was under pressure most of the day, losing value against other major currencies.

 

There also are concerns that Friday's U.S. Department of Agriculture crop report will reveal a decline in production, because some producers have noted late yields not quite as strong as earlier in the harvest, said Britt.

 

The average production estimate for the 2007-08 U.S. corn crop was 13.261 billion bushels, according to a survey of 24 analysts by Dow Jones Newswires, 57 million bushels below the 13.318 billion estimated by the USDA in October. The average yield estimate for the 2007-08 crop was 154.1 bushels per acre, according to the 24 analysts, compared with 154.7 bushels estimated in October. The USDA is scheduled to release an updated report Friday at 0830 EST (1330 GMT).

 

Speculative buying also added to the upside, a floor trader said. Overall commodity fund buying was estimated at 12,000 contracts. Corn also was supported by technical buying, with prices reaching levels not seen since late September. One analyst noted, however, that significant upside resistance in December exists between US$3.87 and US$3.90 on daily charts.

 

Corn's price direction on Wednesday will be determined by what the speculative money does, a trader said.

 

In options trading, Tenco sold 2,000 December US$2.70 calls and MF Global bought 2,000 December US$3.50 puts.

 

Oat futures ended higher with some contracts making new life-of-contract highs as the influence of stronger outside markets and fund-buying buoyed oat prices, a trader said.

 

December oats settled 6 cents higher at US$2.96 3/4 a bushel, and March gained 7 cents to US$3.10 a bushel.

 

Ethanol futures settled higher in thin activity. December ethanol rose 4.7 cents to US$1.827 a gallon and January gained 1.5 cents to US$1.78.