May 13, 2006

 

CBOT Corn Review on Friday: Sharply higher after USDA report

 

 

Corn futures at the Chicago Board of Trade finished with strong gains Friday after a bullishly construed supply and demand report from the U.S. Department of Agriculture, sources said.

 

The July contract settled 11 1/4 cents higher at US$2.58 1/4 per bushel and traded at its highest level since last summer. The December contract rose 10 1/2 cents to US$2.81 3/4 and made a new contract high.

 

The USDA estimated 2006-07 ending stocks at 1.141 billion bushels, well below the average estimate by analysts of 1.582 billion and almost 50% lower than the revised 2.226 billion bushels estimated in the current crop year.

 

The USDA forecast total corn usage would rise 6% to "a record 11.6 billion bushels" due in part to rising demand for corn from the ethanol industry.

 

Ethanol demand is forecast to rise to 2.15 billion bushels in 2006-07, up from 1.6 billion in 2005-06.

 

The market reflected the USDA report on Friday morning, and the funds exacerbated the situation, said Vic Lespinasse of AG Edwards & Sons.

 

Fund buying was estimated at 13,000 contracts.

 

Technical buying contributed to the upside as well, with July gapping open above technical resistance at US$2.50, a floor analyst said.

 

Active buying of deferred contracts in both 2007 and the 2008 crop years were also noted, sources said.

 

The western U.S. Midwest is expected to be mostly dry through the weekend and into the early part of next week with the exception of northeast Iowa and eastern Minnesota, which have a chance of light precipitation early in the period, DTN Meteorologix Weather said. Temperatures are forecast to average below normal.

 

In the eastern U.S. Midwest, a chance for light rain or showers is expected in parts of the region Saturday and Sunday, DTN Meteorologix Weather said.

 

Temperatures are forecast to average well below normal in the period, DTN Meteorologix Weather added.

 

Buyers Friday included ABN Amro, which bought 2,000 July and 500 December 2008. JP Morgan bought 2,000 July and 500 December 2007, RJ O'Brien bought 2,000 July, Fimat bought 2,000 December and 1,200 July, Man Financial bought 1,200 July and 200 December Calyon bought 1,000 July and Citigroup bought 1,000 July.

 

Sellers Friday included ADM, which sold 2,500 December, FC Stonnee sold 1,000 July and 1,000 December, Man Financial sold 1,500 December and 300 July and Fimat sold 800 December.

 

Oat futures settled with good sized gains as light fund buying and spillover support from wheat and corn helped futures rally, an oat trader said. Both July and December made new life-of-contract highs with the July contract ending up 5 1/4 cents to US$1.97 1/4 per bushel. The December contract finished with a gain of 2 1/4 cents to US$1.85

 

Ethanol futures finished higher in light trade as the gains in the expiring May future helped supply support to June and July, an ethanol futures trader said. June ethanol settled 3 1/2 cents higher at 2.90 per gallon and July added on 6 cents to 2.81. The May contract expired 15 cents higher at US$3.10.

 

Friday afternoon the Commodity Futures Trading Commission is scheduled to release the latest commitment of traders data as of May 9.

 

On Monday, the USDA is scheduled to release the weekly export inspections at 10 a.m. CDT and the weekly crop conditions report at 3 p.m. CDT.