January 22, 2010

 

CBOT Corn Review on Thursday: Halts seven-day slide in technical bounce

 

 

Chicago Board of Trade corn ended higher Thursday, halting a seven-day slide amid ideas that the market had fallen too far, too fast.

 

March corn ended up 4 cents, or 1.1%, to US$3.72 per bushel. May corn ended up 4 cents to US$3.82 3/4.

 

Analysts said the climb was a technical bounce following sharp recent losses, and that there was little fundamental news to push the market higher.

 

"We can't go down every day," said Chad Henderson, analyst with Prime Ag Consultants. "The question is, if we bounce, how high do we really need to bounce?"

 

The market closed at the day's highs, and funds bought an estimated 5,000 contracts.

 

Weaker crude and equities limited the market's upside, but soy and wheat, which had pressured corn earlier this week, were also slightly higher Thursday.

 

Citigroup analyst Terry Reilly added there was some bull spread trading Thursday, with the back months finishing less than a penny higher. Analysts noted that a private analytical firm is expected to release 2010 acreage estimates Friday. Many analysts are estimating that corn acreage could climb by 5 million acres or more.

 

Farmers have been unwilling to sell following the market's recent plunge from around US$4.25 in the nearby contract, but Henderson said they will likely be big sellers on any rally.

 

Henderson added that bulls might be encouraged by how the December contract has held above US$4.

 

South American production continues to be a bearish presence in the corn and soy markets. Argentina's commercial corn production is expected to reach 18 million metric tonnes, up 1.5 million tonnes from the previous forecast, the Buenos Aires Cereals Exchange said in its weekly crop report Thursday.

 

Looking ahead to Friday, in addition to the acreage estimate, the U.S. Department of Agriculture will release weekly export sales, as the trade looks for signs that weaker prices are stimulating demand.

 

CBOT oats futures ended higher Thursday. March oats ended up 3 cents to US$2.23 per bushel, and May oats ended up 3 1/2 cents to US$2.32.

 

Ethanol futures were higher. February ethanol ended up US$0.027 to US$1.789 per gallon, and March ethanol settled up US$0.025 to US$1.784.