Corn ends higher on late fund buying

Corn futures at the Chicago Board of Trade closed higher on Tuesday on a technical bounce from Monday's slide to two-month lows with fund buying boosting the market, traders said.
"There was late session fund buying and just a lack of sellers," said Terry Reilly, analyst for Citigroup. CBOT corn closed 1/2 to 5-3/4 cents per bushel higher, with May up 5-1/4 at $2.23-1/2 per bushel. Volume was estimated by the exchange at 136,964 futures and 39,300 options.
Fund buying of 10,000 lots boosted the market. ABN Amro was the featured buyer of 4,000 May, 1,000 July and bought 10,000 May $2.10 calls, a bullish move. ABN Amro was the featured seller of corn futures on Monday.
Chart-based traders were eyeing the nine-day relative strength index for May which closed Monday at 29, below the benchmark 30 level that technical traders view as an oversold area. That scenario often leads to a short-covering bounce or recovery.
May was below all key moving averages early in the session and broke above first key resistance at the 100-day MA of $2.23 near the close of trading. The next level of key resistance is at the 50-day MA of $2.28-3/4.
Gains were slowed by good crop weather in the United States and abundant stocks of feed grains that continue to act as an anchor on the corn futures market. And there may be some hesitancy to buy corn futures amid concerns about the global spread of bird flu.
Traders and corn analysts continue to cite the potential for another good crop year in the United States following back-to-back bumper production seasons.
Recent rainfall in the US Midwest will help buoy spring seedings and prospects for the 2006 US corn and soybean crops, they said, and crop weather remains favourable for soybean and corn production in Argentina and in Brazil.
Updated export data failed to generate any significant bullish momentum and overnight the export arena featured news South Korea bought 220,000 tonnes of US corn. Taiwan is expected to seek corn on Wednesday.
Cash basis bids for corn in the Midwest were firm on Tuesday as dealers tried to generate farmer selling. Oat futures were down 1/2 to up 1/2 cents per bushel, with May down 1/2 at $1.70-1/4. Pit sources said funds were liquidating their long positions. Oats volume was estimated at 1,598 futures and 141 options.