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CBOT corn closes firm on late gains in soyabeans

CHICAGO: Corn futures at the Chicago Board of Trade closed firm on Tuesday on a late rally to 3-1/2 month highs in soyabeans, traders said.

Corn closed unchanged to 1 cent per bushel higher with March up 1/4 at $2.27-1/2.

Traders said soyabeans surged in late trade Tuesday on fund buying and on concerns about dry weather in Brazil's southern soyabean growing region.

Corn struggled to close higher despite fund buying as the market was into near term overbought signals with the nine day relative strength index Tuesday closing at nearly 86 percent in the March. Technicians generally consider an RSI of 70 or above as an overbought market and 30 or below as an oversold market.

March corn climbed Monday to near a four-month high amid aggressive commodity fund buying and signs of improving domestic demand for corn in Friday's USDA Cattle on Feed Report.

Gains in futures triggered a modest pickup in farmer selling in certain areas around the Midwest, merchants said, leading to hedging pressure on futures. Cash corn bids around the Midwest were mostly steady early Tuesday.

Traders expected any declines in the corn market to be limited by stronger technical patterns, which have prompted heavy fund buying in recent sessions, including Monday's.

March corn's gap higher is bullish and the close above $2.24 keeps the market trending higher, despite the overbought momentum studies, a report from RJ O'Brien & Associates said Tuesday in reference to chart action Monday.

"Next resistance is just above the market at the gaps of $2.29-$2.29-1/2, and $2.31-3/4-$2.35-1/2. Closing back below $2.22 would be negative, turn the studies lower and target $2.12," the report said.

Funds bought 4,000 lots. FIMAT Futures bought 700 March and 300 May, E.D. & F. Man International bought 1,000 March, O'Connor & Co. bought 700 March, Refco bought 600 March and 200 May and Cargill bought 200 March and 200 September, traders said. In spreading, Cargill bought 1,000 December and sold 1,000 May at a price difference of 20-1/2 cents. In options, Cargill Inc. bought 1,000 March $2.25 puts, FIMAT Futures bought 3,000 March $2.25 puts and Tenco Commercial Grain bought 1,000 March $1.90 puts.

Corn futures volume was estimated by the CBOT at 72,000 lots, below the 97,850 lots traded Monday.

Corn options volume was estimated at 30,000 lots.-Reuters