December 6, 2006

 

CBOT Corn Review on Tuesday: Ends near session highs as selling fades

 

 

Chicago Board of Trade corn futures ended higher Tuesday and near session highs, recovering on modest buying interest after selling interest eased around midday, sources said.

 

December corn rose 3 1/2 cents to US$3.66 1/4 per bushel and March gained 2 1/2 cents to US$3.78. e-CBOT day session volume in March was 51,106 contracts.

 

Futures traded lower early in the session on follow- through weakness from Monday's declines and lower prices in the overnight session, sources said.

 

Selling pressure eased when the market filled a gap created in mid-November on open auction charts, said Shawn McCambridge, senior grain analyst at Prudential Financial in Chicago. After the last several days of price weakness, the sellers turned cautious, he added.

 

The market tried to sell off three times and failed, and after it couldn't go lower, people who didn't want to miss the next leg of the rally began buying, a floor trader said.

 

Corn was also supported by a move higher in crude oil futures after earlier weakness, floor sources said.

 

However, large deliveries posted against the December contract remain a negative for prices, they added.

 

Deliveries posted against the December contract Tuesday totaled 1,158 contracts. Large issuers included the house account of Deutsche Bank, which issued 1,108 contracts, and the customer account of Bear Stearns, which issued 44 contracts.

 

Large stoppers included the customer account of Bank of America Securities, which stopped 578 contracts; the customer account of FC Stonnee, which stopped 296 contracts; and the LBS division of Man Financial, which stopped 200 contracts. The last trade assigned was Nov. 14.

 

On open auction technical charts, March traded below its 20-day moving average but settled between its 10-day and 20-day moving averages.

 

Buyers Tuesday included Fortis, which bought 1,500 March; JP Morgan, which bought 1,200 March; Rand, which bought 500 March; and UBS, which bought 1,000 March.

 

Tenco sold 500 March; JP Morgan sold 500 March; ABN Amro sold 500 March; and UBS sold 400 July.

 

In options trading, Fimat sold 1,000 March US$3.10 calls and Man Financial bought 2,000 March US$3.30 puts.

 

Oat futures settled higher in light trade with the market following corn, a floor source said. Trading was light all day and when corn moved higher, oats strengthened, he added.

 

Fund buying of the December 2007 contract was also noted, a floor trader said.

 

December oats settled 2 cents higher at US$2.54 per bushel and March rose 1/2 cent to US$2.64 3/4.

 

Ethanol futures ended mixed in light activity. The December contract settled 6.5 cents higher at US$2.45 per gallon. The January contract fell 7.5 cents to US$2.215.