November 21, 2007

 

CBOT Corn Review on Tuesday: Ends stronger on energy rally, soy strength

 

 

Chicago Board of Trade corn futures finished higher Tuesday but below levels set earlier in the session as spillover buying from surging energy prices and good gains posted in soybean futures provided underlying support for corn, analysts said.

 

March corn gained 3 3/4 cents to US$3.98 1/4 per bushel.

 

Crude oil was a big part of the reason why corn was stronger, said Jason Britt, a commodity broker and analyst at Central States Commodities in Kansas City. Nearby January crude oil ended US$3.37 higher at US$98.01 per barrel.

 

A lower U.S. dollar and a rally in precious metals prices helped provide support with stronger soybean futures aiding the upside, said Britt. January soybeans rallied 16 1/2 cents to US$10.87 per bushel.

 

The gains in the other commodities encouraged speculative buying in the grains with commodity fund buying in open auction trading estimated at 6,000 contracts.

 

Corn is a follower not a leader of the other commodities, but with soybeans trading higher, corn needed to rally to encourage plantings next spring, said Britt. December corn trading above the US$3.80 level also brought in buying interest with December corn options expiring Tuesday, a commission house analyst said.

 

Corn's price direction Wednesday will be choppy with grain traders keeping an eye on energy futures for direction in what is likely to be a light volume trading session, a trader said.

 

On daily technical charts, electronically traded March settled above its 10-day moving average and traded an "outside day" with a high and low price range greater than in the previous session.

 

In options trading, RJ O'Brien bought 1,000 March US$4.00 calls and MF Global bought 1,000 March US$3.20 puts.

 

Oat futures settled higher as light buying after recent price weakness and stronger outside markets buoyed prices, an analyst said.

 

March ended up 1/2 cent at US$2.89 1/2.

 

Ethanol futures finished moderately higher. December ethanol rose 5.5 cents to 1.92 per gallon, and January gained 3.2 cents to 1.845.

 

On Wednesday, the CBOT will close at 1300 EST for Thanksgiving and will be closed Thursday.