December 13, 2007

 

CBOT Corn Review on Wednesday: Climbs to six-month highs on speculative buys

 

 

Chicago Board of Trade corn futures rallied to six-month highs Wednesday, buoyed by broad based speculative buying in commodities.

 

December corn ended 10 1/4 cents higher at US$4.16 3/4, and March finished 9 1/4 cents higher at US$4.33 1/4.

 

There is a general perception in the market that speculative funds will continue to extend its long positions through the end of the year, and with a lack of hedge pressure, sellers have stepped to the sidelines, said Shawn McCambridge, senior grains analyst with Prudential Financial in Chicago.

 

Speculative buying was a dominant force in the market, with support from a strong fundamental demand base and technical strength underpinning prices, analysts said.

 

Adding to the day's supportive equation was news of central banks around the world adding liquidity to the marketplace, and that sparked a new wave of speculative fund buying that lifted futures in range of their contract highs set in June, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The Bank of Canada, the Bank of England, the European Central Bank, the U.S. Federal Reserve and the Swiss National Bank all announced measures designed to address elevated pressures in short-term funding markets.

 

Meanwhile, spillover support from limit-up wheat futures, bullish price outlooks from a prominent investment firm, and strong demand helped extend the rally into the close, analysts said. In addition, mild concerns surrounding dryness in Argentina was seen aiding the higher tonnee.

 

The DTN Meteorlogix weather forecast said corn in Argentina is benefiting from cooler conditions and some rainfall, but the precipitation will be minimal. Conditions into next week will be hot with below-normal rainfall, Meteorlogix added.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended Dec. 6 at 8:30 a.m. EST. Trade estimates put corn export sales at 1,000,000 to 1,850,000 metric tonnes.

 

In pit trades, Rosenthal bought 3,000 March and Rand Financial sold 1,500 March. Speculative fund buying was estimated at 6,000 lots.

 

CBOT oat futures rose on spillover support from the rally in the rest of the CBOT ag futures, a floor trader said. March oats settled 3 cents higher at US$2.94 1/2 per bushel.

 

Ethanol futures ended higher. January ethanol gained 3 cents to US$1.94 per gallon and February rose 1.7 cents to US$1.96.