14th Mar, 2006: USA - CBOT May corn futures closed higher Tuesday on fund and light commercial buying, allowing prices to reverse course from a weak trade, sources said.
Most-active May corn rose 3 cents to $2.31 3/4 a bushel, while March expired 1 3/4 cents lower at $2.18 3/4.
Ideas that corn export demand will remain strong, even in the face of bird flu discoveries around the world, are supportive for the market, which resulted in some commercial pricing, said independent analyst John Kleist.
"Bird flu has not yet translated into lower exports and that has been the main supportive feature in corn for the last month and a half," he said.
U.S. Department of Agriculture Secretary Mike Johanns said Tuesday in Berlin that the U.S. is preparing for the arrival of bird flu and has held "significant planning sessions" in the event of an outbreak.
Bird flu has spread from Asia via wild birds to Europe, the Middle East and Africa.
Corn is used in poultry feed, and poultry consumption in affected areas around the world is declining as a result of bird flu. Soymeal is used more widely in poultry feed, however, and is more directly impacted, traders said.
Meanwhile, index fund Deutsche Bank was estimated to have bought as much as 4,000 December contracts, which supported that market, a trader said.
The buying was rumored to be based on ideas that the La Nina weather phenomenon may produce a drought this summer and reduce the crop, he said.
However, corn futures were weak earlier in the session on rains that fell on much of the Midwest over the weekend, recharging soil moisture ahead of planting season.
"We've laid some good moisture groundwork for plantings," Kleist said.
Another weather system may produce more rain and storms in the Midwest this weekend and early next week. Precipitation should average near to above normal, DTN Meteorlogix said.
The corn market also received spillover support from strengthening soybean and meal prices, Kleist said.
Technically, May corn finds support at $2.25 3/4, $2.22 3/4, $2.17 1/2, $2.15 1/4 and $2.13 1/2. Resistance is met at $2.32, $2.35 3/4, $2.40 and the gap that runs from $2.43 1/2-$2.44 3/4.
Deutsche Bank bought 3,000 Dec; O'Connor bought 1,500 Dec and 300 Mar; Fimat bought 500 Jul; R.J. O'Brien bought 500 Mar; Iowa Grain bought 400 May; FCStone bought 400 May and 200 Mar; Man Financial bought a net 200 May; and R.J. O'Brien bought 500 Mar.
On the sell side, Calyon Financial sold 3,000 May; Fimat sold a net 400 May; ADM sold 500 May and 300 Dec; ABN Amro sold 200 May and 300 Dec; O'Connor sold 500 July and 200 May; R.J. O'Brien sold 500 May; Shatkin Arbor sold 400 May; and UBS sold a net 200 May.
Funds sold an estimated 2,500 corn contracts, which didn't include the late buying interest in the market.