November 8, 2006

 

CBOT Corn Review on Tuesday: Settles higher; new contract highs

 

 

Chicago Board of Trade corn futures settled higher Tuesday as speculative buying lifted prices, with deferred contract months setting new-life-of-contract highs.

 

December corn gained 7 1/2 cents to US$3.51 cents per bushel and March rallied 8 1/4 cents to US$3.66 3/4 after setting a new life-of-contract high of US$3.67 1/2. E-CBOT day-session volume in December was 63,379 contracts.

 

The market is getting close to the U.S. Department of Agriculture crop production and supply-demand reports and is nervous that the reports could be bullish, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Corn has had a constant run of bull news for the last couple months so the trade is on edge that corn could see additional bullish news, he added.

 

In a survey conducted by Dow Jones Newswires, the average of 21 analysts' estimates forecast 2006-07 corn production at 10.838 billion bushels, 67 million bushels below the USDA October estimate.

 

The average estimate of the crop's yield by 20 analysts was pegged at 152.5 bushels per acre, below the 153.5 forecast by the USDA in October.

 

The average of 15 analysts estimates 2006-07 ending stocks at 912 million bushels, 84 million bushels below the 996 million estimated in October by the USDA.

 

The market is trying to reach a price level to increase producer movement of cash corn, but so far the market hasn't reached those levels, Roose noted.

 

Corn traded lower early in the session but was unable to generate any follow through to the downside as "speculative money keeps pouring into the market," a floor-based commission house analyst said.

 

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

 

On daily open-auction technical charts, December remained above an upside price gap created last week, but below the contract high set last Thursday. December's 14-day relative strength index stands at 74.88.

 

Buyers Tuesday included the USA Trading division of Man Financial, which bought 1,200 July; Man Financial, which bought 600 December and 200 July; JP Morgan, which bought 600 December and 500 March; and Rosenthal, which bought 500 December.

 

Rand Financial sold 300 December, UBS sold 300 March and Citigroup sold 300 March.

 

In spread trading, Merrill Lynch bought 2,300 December 07-December 06, and Fortis bought 4,000 March 07-December 06.

 

Oat futures ended moderately higher and made new life-of-contract highs across the board as speculative commission house buying pushed prices higher against limited selling interest, a commission house analyst said.

 

December oats settled 4 1/4 cents higher to US$2.65 1/4 cents per bushel and March rallied 5 cents to US$2.75.

 

Ethanol futures settled higher. The December contract settled 5 cents higher to US$2.12 cents per gallon. The January contract did not trade and rose 4 cents to US$2.07.