December 12, 2007

 

CBOT Corn Review on Tuesday: Rallies on technical buying, soy spillover

 

 

Chicago Board of Trade corn futures settled moderately higher Tuesday and near session highs as spillover from stronger soybean futures, technical buying and a supportive USDA supply/demand report boosted prices, analysts said.

 

March corn gained 6 1/4 cents to US$4.24 per bushel and traded to its highest level since June 19 on daily technical charts.

 

"The rally in corn was partly related to technical buying and partly from the ongoing acreage battle corn is having with soybeans," said Vic Lespinasse, an analyst at Illinois Grain. Soybeans continue to rally and as a result, corn prices need to go higher in order to keep some of the acreage it gained this year, said Lespinasse.

 

Jan soybeans settled 9 3/4 cents higher at US$11.35 1/2 and made another new life-of-contract high.

 

A larger-than-expected decline in U.S. corn ending stocks provided early support with the USDA estimating 2007-08 corn ending stocks at 1.797 billion bushels, down 100 million from the 1.897 billion projected in November and the average analyst estimate of 1.797 billion bushels.

 

The news from the USDA was not much of a surprise but provided some support, a trader said.

 

Sharply higher crude oil futures prices also supplied support to corn given its use as ethanol's feedstock. Nearby crude oil futures settled US$2.18 cents higher at US$90.04 per barrel.

 

Speculative-based buying also contributed to the upside, an analyst said. Commodity fund buying was estimated at 9,000 contracts.

 

Price direction on Wednesday depends on what happens in soybeans, crude oil and other outside markets, as corn is currently not trading its fundamentals, a commission house analyst said.

 

On daily technical charts, March corn made a another new high for the recent move for the fourth straight day and set another fresh 5 1/2 month high.

 

In options trading, MF Global bought 2,000 February US$3.80 puts and Fimat bought 1,000 July US$5.00 calls.

 

Oat futures settled sharply higher as aggressive fund buying throughout the day helped boost prices, a trader said.

 

March oats settled 7 1/2 cents higher at US$2.91 1/2 per bushel.

 

Ethanol futures ended higher. January ethanol gained 2.1 cents to US$1.940 per gallon and February rose 4.9 cents to US$1.943.