November 27, 2008

CBOT December corn deliveries seen at 500 - 3,000 contracts


Deliveries against the Chicago Board of Trade December contract are expected to range from 500 to 3,000 contracts on Friday (November 28), which is first-notice day.


Most estimates ranged between 1,000 and 2,000 contracts. As of Wednesday, 4,031 contracts were registered for delivery, according to the CBOT Registrar's office.


Demand is weak, and there is plenty of corn available after a strong harvest, traders said. Commercial funds should be willing to give up ownership of the receipts without worrying about replacing the grain, traders said.


Traders also noted, however, that predicting deliveries on first notice day has been difficult recently and that recent predictions of heavy deliveries have not come to pass.


Currently the December/March spread is trading around 17 cents, with full carry at 18 1/2 cents, according to a floor trader. "Carry" is the cost of taking delivery of the grain and includes storage, insurance and interest.


When a market is at full carry, someone who owns deliverable receipts can deliver the corn and have someone else pay for the cost of storing it, analysts said.


Mike Zuzolo, senior analyst with Risk Management Commodities, said some traders are reluctant to get into long corn positions now because of anticipated high deliveries and the expectation that a lot of corn will be entering the market during the next 30 days.


Open interest in the December contract was 87,193 contracts as of the close of trade Tuesday.


December corn settled 1/2 cent higher Wednesday at US$3.54 per bushel. The market will be closed Thursday for Thanksgiving.


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