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CBOT corn ends up on fund buying, soybean surge

CHICAGO: Corn futures at the Chicago Board of Trade closed higher on Thursday on fund buying and on a surge in soybean futures, traders said.

Corn closed 1 to 3-1/2 cents per bushel higher, with March up 2-3/4 at $2.25-3/4.

"It was big fund buying, there wasn't anything else to move it higher," said Shawn McCambridge, analyst for Prudential Securities. "We were correcting earlier and locals were short but when the funds came to buy it, locals covered."

The fund buying in corn Thursday was estimated at at least 7,000 lots. "I'm thinking funds are net long now by 85,000 to 100,000 contracts plus you can add today's to that," McCambridge said.

Corn also found support from colder U.S. weather and a slowdown in farmer selling which has limited hedging pressure on futures.

Cash merchandisers said frigid temperatures have combined with a pullback in futures prices to discourage farmer selling around the Midwest. Cash corn basis values were mostly steady early Thursday. The market otherwise had little fresh fundamental guidance. Futures faded initially on a continued technical correction from the recent rally, traders said.

Traders also cited concern over stiff competition for world corn demand provided by China.

Overnight, the Korea Corn Processing Industry Association invited tenders to buy 177,500 tonnes of Chinese, Argentine or U.S. corn by Friday, traders said in previous Reuters reports.

The Korea Feed Association bought 157,500 tonnes of corn, 52,500 from China and the other 105,000 from either China or the U.S. Technical factors argued for further downside for corn futures, some traders said. "The momentum studies are extremely overbought, which argues against the upside now," a report from Chicago trading firm R.J. O'Brien & Associates said Thursday.

A close in March futures above $2.24 would target a rise to $2.29-$2.29-1/2 and $2.31-3/4-$2.35-1/2, the firm said. "Otherwise, with the studies this overbought, a correction to $2.15-$2.10 support zone is likely," R.J. O'Brien added.

Funds bought 7,000 lots. Prudential Securities bought 2,500 March, O'Connor bought 1,500 March and Cargill sold 1,000 March. TENCO Commercial Grain sold 800 March $2.30 puts.

Corn futures volume was estimated by the CBOT at 58,000 lots, below the 71,043 lots traded Wednesday.

Corn options volume was estimated at 16,000 lots.-Reuters