Corn futures at the Chicago Board of Trade closed higher on Monday on a recovery from the declines last week and on a strong rally in soyabeans, traders said.
"We were oversold after going to three-week lows last week so it's just recovering. For now, everyone who wanted to get out did so, but I think we'll have this kind of volatility through the holidays," said Shawn McCambridge, analyst for Prudential Financial.
CBOT corn closed 1 to 4 cents per bushel higher, with December up 1-1/4 at $3.55-1/2 per bushel. March was up 2-1/4 at $3.70-3/4. Volume was on the light side, estimated by the CBOT at 140,020 corn futures and 30,473 options.
Early in the day, corn fell as some investment funds chose to bank profits on their long positions ahead of the end of the year. The rally in corn futures this winter to the highest level in a decade had left the market loaded with a large number of speculative long positions.
Friday's CFTC commitments of traders report showed that as of last Tuesday, large speculators were long 330,634 lots, down 7,335 from the previous week and short 51,405 lots, down 2,099. Traders had a neutral reaction to USDA's December supply/demand report that was released early on Monday. "It's pretty much neutral for corn," McCambridge said.
USDA pegged 2006/07 US corn ending stocks at 935 million bushels, below an average of analysts' estimates for 941 million and unchanged from USDA's forecast in November. "We're a little higher on the world ending stocks. That could be a concern to some, but they are probably holding short positions. The South American crop looks like it's coming along well, according to USDA," he said.
USDA pegged 2006/07 global coarse grain production at 969 million tonnes, up 4.5 million tonnes from last month. Much of the increase stemmed from higher corn production in Argentina and in Brazil where crop area was raised due to good weather and the sharp rise in world corn prices.
USDA forecast 2006/07 Argentine corn production at 19.0 million tonnes, up from the forecast in November for 17.5 million, and pegged Brazil's corn crop at 42.0 million, up from the November outlook for 41.0 million.
Exports were quiet over the weekend. Trade sources in Seoul said Japanese and South Korean corn buyers are expected to take a break after a spate of buying last week.
USDA early Monday said 40.2 million bushels of corn were inspected for export last week, within the range of estimates for 38.0 million to 42.0 million bushels.
Attention to crop weather has shifted to South America because the corn and soyabean crops in the United States have been harvested as Brazil and Argentina enter the important growing season.
Meteorlogix weather on Monday said hot and dry weather the past couple of weeks has depleted soil moisture in Brazil's Rio Grande do Sul and some hot weather is expected over the next five days in Argentina.