November 9, 2005

 

CBOT Corn Review on Thursday: Slight gains; low-volume trade

 

 

Chicago Board of Trade corn futures closed slightly higher Tuesday on light fund buying and spillover from firmer soybean and wheat futures, sources said.

 

However, traders were unwilling to commit to strong positions ahead of Thursday's crop production and supply/demand reports from the U.S. Department of Agriculture, which are expected to show production up slightly from last month and ending stocks remaining at burdensome levels.

 

December corn settled 1/2 cent firmer at US$1.95 1/4 a bushel, March corn was up 1/2 cent at US$2.10 and May corn gained 1/2 cent to US$2.18.

 

"Given the price level we're at and getting down close to the lows we had in corn last year and the fact that we've got a report coming Thursday morning, I just think there's no interest in moving it one way or another," said Dale Durchholz, senior market analyst at AgriVisor Services in Bloomington, Ill.

 

"Frankly, corn really has gotten itself into a position here again where it needs leadership from elsewhere to move," he added.

 

The market's attention is focused on the coming data, though most market participants are looking for small changes to the 2005-06 crop, currently projected at 10.857 billion bushels.

 

The range of expectations runs from 10.818 billion on the low side to 11.085 on the high side, for an average corn estimate of 10.965 billion bushels, a Dow Jones Newswires survey found.

 

Durchholz, however, looks for a slightly smaller production estimate of 10.817 billion bushels due to higher-than-expected field losses in some areas.

 

Corn ending stocks are expected to average 2.281 billion bushels, up slightly from 2.22 billion in October.

 

Meanwhile, corn basis has continued to improve in many areas due to a drop in barge freight rates, according to commentary on CashGrainBids.com. Many markets in Iowa and Illinois saw firming basis levels as the harvest enters its final phase, allowing a typical seasonal basis uptrend. In addition, many river terminals have increased basis by 15 cents or more in the past month, it said.

 

December corn traded to a two-session high of US$1.95 3/4 at one point during the session but gave up some gains by the close. Technical support at Monday's US$1.94 1/4 contract low held as December traded to a Tuesday low of US$1.94 1/2 a bushel.

 

December's range for the day, however, was confined to a tight 1 1/4 cents.

 

Funds bought an estimated 400 contracts.

 

Man Financial, ABN Amro and Tenco each bought 200 December, while UBS bought 200 March. ADM and CIS each sold 200 December, while Tenco sold 300 March.

 

Spread trading was fairly active, with O'Conner and Fimat each trading 1,500 March/Decembers at 14 1/2 cents.

 

December ethanol futures settled 1 cent lower US$2.00 1/2 a gallon, while January was unchanged at US$1.88.

 

December oat futures closed 1/2 cent higher at US$1.66 a bushel.