February 3, 2007

 

CBOT Corn Review on Friday: Up on speculative buys, soybean influence

 

 

Chicago Board of Trade corn futures ended higher Friday, bouncing back from earlier declines on speculative led buying and spillover strength from soybeans.

 

March corn ended 4 cents higher at US$4.02 per bushel, and December finished 4 3/4 cents higher at US$3.97 1/4.

 

The underlying bullish theme of the market continues to keep a floor under prices, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

The inability of futures to find follow through selling at session lows, the emergence of scale down commercial buying and a midday surge in neighboring soybeans attracted speculative and local buying to firmly plant prices in positive territory, Hoops added.

 

Reports that a survey from Pro Farmer Newsletter projected corn acreage as high as 12 million acres above 2006 and soybean acres down 8 million from 2006, provided a spark that ignited soybeans to 15 cents gains, traders said.

 

The supportive influence of soybeans raised concerns that corn will have to rally in step with soybeans to secure those added acres, uncovered speculative buying to launch corn prices as well, a CBOT floor analyst said.

 

Pro Farmer, an agricultural newsletter, released a survey Friday that calls for U.S. corn acres in 2007 to increase by 10.9 million to 11.8 million acres and soybean acres to drop by 8.6 million to 9.4 million acres. The new Pro Farmer survey includes responses received from newsletter members in 23 states over the past two weeks, editor Chip Flory said. In 2006, U.S. farmers planted about 78.3 million corn acres and 75.5 million soybean acres.

 

Meanwhile, further support was generated from outlooks for increased livestock feedings during a central U.S. cold wave, as well as end of the week position squaring, analysts added. Despite, the late gains, corn remains entrenched in its recent trading range, traders added.

 

The DTN Meteorlogix weather forecast said the eastern Midwest is continuing to see very cold temperatures, especially near the Great Lakes in Michigan, Wisconsin and Illinois where lows are likely to get down to 20 below zero this weekend and into next week. To the south and east, in Illinois, Indiana and Ohio, the lows will only be down to about minus 5. The Central and Northern Plains are also in for some very cold temperatures this weekend and early next week.

 

In Argentina, rain is expected to be minimal until Monday night, when showers and thundershowers will start and should last until Wednesday. Those rains are mostly in the south, which is where conditions have been the hottest.

 

In pit trades, JP Morgan bought 500 March, Fortis bought 1,000 March and 500 July, Rand Financial bought 700 March and UBS Securities bought 300 March and 1,000 December. Fimat sold 1,000 May, ADM Investor Services sold 300 March, JP Morgan sold 700 March, UBS Securities sold 300 July, Fimat sold 300 May, and Rand Financial sold 300 December. Speculative funds were estimated buyers of near 4,000 contracts.

 

Day session volume on the e-CBOT platform was 96,782 contracts.

 

CBOT oat futures ended mixed, with the liquidation of March futures and fund buying in new crop December featured once again, traders said. Spillover strength from soaring corn and soybeans boosted prices, but the funds are loving December futures, rallying prices into farmer hedging resting above the market, a trader added. March oats closed 1-cent higher at US$2.58 per bushel and December ended unchanged at US$2.50 1/2.

 

Ethanol futures ended higher, with the February contract settling US$0.015 higher at US$2.025, and the March contract settled 0.005 higher at US$1.985.