November 21, 2006

 

CBOT Corn Review on Monday: Higher after early strong rally

 

 

Chicago Board of Trade corn futures settled higher Monday, but well off strong gains made early in the day. Several months set new life-of-contract highs and traded to levels not seen in 10 years.

 

December corn settled 4 3/4 cents higher at US$3.60 per bushel and March gained 4 1/2 cents to US$3.75. e-CBOT day session volume in December was 48,082 contracts.

 

Spillover buying from stronger prices overnight and speculative buying pushed prices higher.

 

Higher prices for domestic corn in China overnight and news Friday that Argentina was closing its corn export registry helped push prices higher.

 

The decision to close the registry sent international corn prices higher on expectations on limited supply.

 

Technically driven speculative buying added to the early gains, sources said.

 

Profit-taking after the highs were set helped prices retreat but the market remains "energized," said Vic Lespinasse of A.G. Edwards & Sons.

 

"Countries are taking steps to slow down their corn exports to ensure their domestic needs are met and that is bullish," Lespinasse said.

 

Argentine Agriculture Secretariat Cabinet Chief Patricio Lamarca told Dow Jones Newswires Monday that "we haven't in any way suspended exports and we're not thinking about setting any export quotas on corn or wheat."

 

The country's corn export registry remains closed while the government reviews a recent floor of new-crop corn export declarations.

 

Export inspections were released by the U.S. Department of Agriculture during the session and had little impact.

 

Export inspections were 47.048 million bushels for the week ended Nov. 16, within analysts' estimates of 36 million-48 million.

 

On daily open auction technical charts, March gapped open higher and reached a new life-of contract high and its highest level in a decade.

 

Buyers Monday included ABN Amro, which bought 700 March; Man Financial, which bought 600 December and 200 July; UBS, which bought 500 December; and ADM Investor Services, which bought 400 December and 200 March.

 

UBS sold 1,000 July; JP Morgan sold 1,000 July, 500 March and 200 December; and Man Financial sold 500 March and 300 December.

 

Oat futures ended mixed as the market remains a "weak follower of corn and wheat," a floor analyst said. The major feature was the roll out of December into March, he added.

 

December oats settled 1 cent lower at US$2.55 1/4 per bushel and March ended unchanged at US$2.68.

 

Ethanol futures settled mixed. The December contract did not trade and settled 3.5 cents higher at US$2.12 cents per gallon. The January contract also did not trade and rose .008 cent to US$2.048.

 

On Monday afternoon, the USDA is scheduled to release the weekly crop progress report at 3 p.m. CST.