December 21, 2005

 

CBOT Corn Review on Tuesday: Up on technical, fund buying, wheat

 

 

Corn futures at the Chicago Board of Trade finished higher Tuesday with prices supported by technical and fund buying, a floor source said.

 

March futures moved above technical resistance at US$2.10 but were unable to finish above that level.

 

March corn gained 1 cent to US$2.09 3/4 per bushel, with May also up 1 cent to US$2.18 3/4 and July corn settling 1/2 cent higher to US$2.27 1/4 cents per bushel.

 

March at one point traded as high as US$2.12, its highest level in more than one month.

 

Technical buying and heavy fund purchases, thought to be short covering, boosted prices early, a floor broker said, with March futures breaking above the US$2.10 level, a key technical resistance point, and posting its highest price in more than one month.

 

March breached stops around the US$2.10 level and ran up to US$2.12, but did nothing for the rest of the session, as the market had no follow-through, said Shawn McCambridge, senior grain analyst with Prudential Financial in Chicago.

 

If wheat was not able to sustain its gains on the close, corn would have had a hard time keeping its gains, McCambridge said.

 

"Unless corn gets outside help Wednesday, it will erode as it is overbought right now," he added.

 

Wheat futures settled moderately higher, supported by fund short covering. March wheat gained 4 3/4 cents, settling at US$3.28.

 

Trading activity slowed dramatically after the first half-hour of trading with futures struggling to remain above US$2.10.

 

Several traders noted the light trade resembled holiday-type trading with the coming holiday season beginning to take its toll on volume.

 

There was little fresh fundamental news released Tuesday, with technical and fund trading dominating activity, sources said. Commodity fund buying was estimated at 12,000 contracts.

 

Buyers on Tuesday included Calyon Financial buying 8,000, FC Stonnee buying 1,000 March and 200 May, ADM buying 1,000 March, Citigroup buying 1,000 March, O'Connor buying 1,000 March, and Rand Financial buying 1,000 March.

 

Sellers Tuesday included Cargill selling 2,000 March, FC Stonnee selling 1,000 March, ABN Amro selling 200 March, Man Financial selling 300 July and R.J. O'Brien selling 300 July.

 

Oat futures settled mostly lower, giving back some of its advances posted Monday. The March contract declined 4 3/4 cents higher to US$1.89 3/4 per bushel.

 

Ethanol futures ended mixed. The most-active April contract slipped 2 cents to US$1.98 per gallon.