January 9, 2010
CBOT Corn Review on Friday: Up as market surges late on fund buying
Chicago Board of Trade corn ended higher Friday, surging as expected amid a late flurry of fund buying, traders said.
March corn ended up 5 1/2 cents to US$4.23 per bushel and May corn ended up 5 1/4 cents to US$4.33 1/4.
Funds bought an estimated 15,000 contracts, with much of that attributed to index fund rebalancing, which traders said was expected to start Friday and last five days.
After choppy trading all day, the market surged in the last couple of minutes. March corn failed to top Monday's high of US$4.26, but the close was still strong technically, one trader said, as it was the highest weekly close for front-month corn since June.
Open interest has soared in recent days, which some said was a sign that the index funds had already started their rebalancing.
The fact that the market has mostly moved sideways while open interest climbs shows there is "a battleground," one analyst said, "and I suspect it's between the funds and the commercials."
Corn was joined in its rally by wheat, which traders said also benefited from index fund activity. Soybeans were weaker all day, however, limiting the gains. Most analysts said the fundamentals are not strong enough to support current prices, and that the market could start to slip if fund money and outside macro markets aren't supportive.
The trade is also awaiting what many expect will be mildly bullish government reports Tuesday.
Analysts surveyed by Dow Jones Newswires are, on average, expecting the U.S. Department of Agriculture to estimate the 2009 corn crop at 12.819 billion bushels, down from its previous estimate of 12.921 billion.
Ending stocks for 2009-2010 are projected at 1.613 billion bushels, down from the December estimate of 1.675 billion.
The USDA will release the estimates at 8:30 a.m. EST Tuesday.
CBOT oats futures ended slightly higher. March oats ended up 1 cent to US$2.75 per bushel and May oats ended up 1 cent to US$2.83 1/4.
