January 17, 2009

 

CBOT Corn Review on Friday: Surges; short-covering, spread unwinding

 

 

Short-covering and continued strength in soybeans lifted Chicago Board of Trade corn futures sharply higher Friday, traders said.

 

March corn ended up 25 3/4 cents to US$3.91 per bushel, May corn ended up 25 1/2 cents to US$4.01 3/4 and July corn ended up 26 cents to US$4.12 1/2.

 

The market was higher most of the day, and surged late. There was no single impetus, but a focus of the trade was the corn-soybean spread, which has grown considerably in recent weeks, traders said.

 

"Corn guys are beginning to say, we're cheap enough, it's not exactly hugely profitable to plant corn, and it's a much better deal to plant beans, so we better keep some price if we want to get any corn at all," said Price Futures Group's Jack Scoville.

 

A trader added that short-covering fueled gains, and that "a little demand is coming back into the market too."

 

But fundamentally, the market remains weak as poor demand lingers, said Joel Karlin, analyst for Western Milling.

 

"Even a broken clock is right twice a day," Karlin said of corn's strength.

 

He said he doesn't expect much of a near-term rebound in demand, as ethanol and livestock margins remain poor. Soybeans remain strong on South American weather, which is boosting corn as well, traders said.

 

Weakness in the dollar boosted corn along with most other commodities, traders added.

 

Also on Friday, private analytical firm Informa Economics pegged 2009 corn plantings at 82.7 million, traders said. In 2008, corn was planted on 86 million acres, according to the U.S. Department of Agriculture.

 

The USDA will issue its first 2009 soybean and corn acreage estimates March 31. The crops will be planted in the spring.

 

CBOT oats followed outside markets higher, a trader said. March oats ended up 5 1/2 cents to US$2.22 1/2 cents per bushel, May oats ended up 5 1/2 cents to US$2.32 and July oats ended up 5 1/2 cents to US$2.41 1/2.

 

Ethanol futures were higher. February ethanol ended up US$0.064 to US$1.612 per gallon and March ethanol ended up US$0.080 to US$1.630.