January 1, 2010

 

CBOT Corn Review on Thursday: Up slightly; trade awaits index funds

 

 

Chicago Board of Trade corn ended less than a penny higher Thursday amid year-end positioning on the final trading day of 2009.

 

March corn ended up 3/4 cent at US$4.14 1/2 a bushel, and May corn ended up 3/4 cent at US$4.24 1/4.

 

The market was higher throughout the session but barely stayed above water in a late swoon throughout the grains complex that was attributed to profit-taking. Funds bought an estimated 2,000 contracts in the session.

 

Shawn McCambridge, senior grains analyst for Prudential Bache, said sellers were staying on the sidelines as few people want to add short positions ahead of index fund rebalancing expected at the start of the new year.

 

The extent of that index-fund buying could determine corn's direction, traders said.

 

"The corn market has been moving higher, and technically it looks strong," Linn Group analyst Jim Riley said in a commentary. "But one has to wonder how much of the rally is based solely on the expectations that funds are going to be buying corn after Jan. 1."

 

Some analysts also warn that given the market's recent gains, the index-fund rebalancing could be a "buy the rumor, sell the fact" situation.

 

The possibility of a bullish revision to the crop in next month's U.S. Department of Agriculture reports is also underpinning the market, analysts said. The reports will be released Jan. 12.

 

The March contract gained six cents on the week. The market is closed Friday for the New Year's Day holiday.

 

The market could face pressure from the South American crop, which is shaping up to be strong thanks to favorable weather, traders said.

 

Argentina's farmers are pressing ahead with corn planting, taking advantage of improved soil moisture to plant 86% of the area seen going to the 2009-10 crop, the Agriculture Ministry said in its weekly report Thursday, listing conditions as of Dec. 31.

 

In the key corn area of Marcos Juarez in Cordoba province, "rain in the final two weeks of December has been very beneficial for the crop, arriving at a time of flowering or prior to this stage to maintain high expectations for yields. Conditions are generally very good," the ministry said.

 

CBOT oats futures ended up slightly. January oats ended up 3/4 cent at US$2.77 a bushel, and May oats ended up 3/4 cent at US$2.85.

 

Ethanol futures were higher. January ethanol ended up US$0.011 at US$1.950 a gallon, and March ethanol settled up US$0.015 at US$1.914.