December 14, 2007
 
CBOT Corn Review on Thursday: Higher but profit-taking trims gains

 

 

Chicago Board of Trade corn futures ended higher Thursday but well off of session highs as profit-taking trimmed gains after the March contract was unable to trade above its open auction contract high set last summer, an analyst said.

 

March corn settled 1 3/4 cents higher at US$4.35 per bushel, after trading as high as US$4.38 3/4 on strong speculative buying, though stiff technical resistance at US$4.39 led to selling, an analyst said. The March life-of-contract high in open auction trade is US$4.39 per bushel, with the high in electronic trading at US$4.43, both set on June 18.

 

In open auction trading, commodity fund buying was estimated at 8,000 contracts.

 

Prices were also supported by corn-wheat spreading as corn looks undervalued compared to wheat prices, a commission house analyst said. CBOT March wheat settled 13 cents higher at US$9.53 1/2 per bushel.

 

Speculative participants appeared to want to buy corn Thursday, exiting out of energy and oil positions, the commission house analyst said. Nearby crude oil settled over US$2 per barrel lower with nearby gold futures ending down over US$15 per ounce.

 

Another favorable weekly export sales report added to the positive tonnee, a trader said. The U.S. Department of Agriculture reported that weekly export sales were 1.466 million metric tonnes for the week ended Dec. 6, within the 1.1 million to 1.85 million metric tonnes expected by analysts. Included in the total were sales of 310,000 tonnes for delivery in the 2008-09 marketing year. A trader termed the sales as "supportive."

 

Despite the exports, profit-taking and ideas recent gains were overdone after the recent sharp rally contributed to trimming the gains late, with a stronger U.S. dollar also limiting the upside, the trader added.

 

Price direction on Friday depends on the direction of speculative interests, though corn could see some profit- taking ahead of the weekend, an e-cbot trader said.

 

On daily technical charts, March corn traded to its highest level since June 18 with the 14-day Relative Strength Index in March at 76.59.

 

In options trading, MF Global bought 3,000 July US$3.90 puts and bought 2,000 March US$3.90 calls and sold 2,000 March US$4.10 calls.

 

Oat futures settled unchanged to higher as fund and thin speculative buying supported prices, though light commercial-related selling was noted on a scale-up basis, a trader said.

 

March oats ended unchanged at US$2.94 1/2 per bushel.

 

Ethanol futures settled with strong gains. January ethanol rallied 7.9 cents to US$2.049 per gallon and February settled 5.9 cents higher to US$2.019.