January 6, 2010
CBOT Corn Review on Tuesday: Up slightly as traders await index funds
Chicago Board of Trade corn futures ended less than a penny higher Tuesday, crawling up in late trading amid questionable fundamentals and expectations of buying by index funds.
March corn ended up 1/4 cent at US$4.18 3/4 a bushel, and May corn ended up 1/4 cent at US$4.29.
Prices were down a penny or two throughout the session but a slight bump near the close pushed them into positive territory.
There was little fresh news to push the market higher, traders said. One supportive feature has been expectations of rebalancing by index funds in the first week of the new year.
Chad Henderson, an analyst with Prime Ag Consultants, said that if the expected fund-buying is such a factor, "how come volume on March corn was only 65,000 contracts? That's pretty low.
"As you move ahead, there could be some doubt there as to how much money flow we're seeing in this corn market, and that tends to be the most bullish story out there," he added.
A recovery in the dollar put downward pressure on prices during the session, traders said. They added that fundamentally the market is shaky, thanks to lackluster demand and favorable South American weather.
"Further gains in corn must come from brute force of fund-buying," Rich Feltes, senior vice president for MF Global, said in a commentary.
Funds bought an estimated 1,000 contracts Tuesday.
The trade is looking ahead to the Jan. 12 supply-and-demand and crop-production reports. Some traders and analysts are expecting some reduction in the size of the 2009 crop because of problems with the harvest, although they say it could be balanced out by a reduction in demand.
CBOT oats ended lower in a correction following recent gains. March oats ended down 5 cents at US$2.74 a bushel and May oats ended down 4 3/4 cents at US$2.82 1/4.
Ethanol futures were lower. January ethanol was down US$0.018 at US$1.947 a gallon and March ethanol ended down US$0.003 at US$1.928.
