January 24, 2009

 

CBOT Corn Review on Friday: Climbs on export sales; soy limits gains

 

 

Unexpectedly strong export sales and concerns about the crop in Argentina pushed Chicago Board of Trade corn futures higher Friday, traders said.

 

March corn ended up 3 cents to US$3.90 1/2 per bushel, May corn ended up 3 cents to US$4.01 1/2 and July corn climbed 3 cents to US$4.12.

 

Strong weekly net export sales exceeding 1 million metric tonnes set the tonnee early, traders said. The sales were the strongest of the marketing year, and analysts noted the sales highlighted that Argentina, the world's second-largest corn producer, is in a drought and may not be able to export as much corn.

 

The market later trimmed gains as the soybean market failed to breach technical resistance and retreated, traders said. Soybeans have been leading corn in recent days, as any soybean rally prompts ideas that corn needs to keep pace to maintain its planted acreage.

 

Corn had climbed above its 20-day average early in the session but closed below it. A trader added that US$4 poses strong resistance. The nearby March contract climbed to US$4.00 1/2 but quickly retreated.

 

There was profit-taking ahead of an uncertain weekend, with the trade watching forecasts calling for rain in South America, traders said.

 

"Sunday night ought to be an interesting event, as people survey rain-gauge totals in Argentina and southern Brazil," said Dave Marshall, an independent adviser and commodities broker in Nashville, Ill.

 

The uncertainty of weather still more than 24 hours away prompted caution in traders, though some traders and analysts said they weren't expecting the rain would mitigate the effects of a drought in Argentina.

 

"If this rain doesn't materialize, you're going to have to start [reducing] the crop in a much more aggressive way," said Sid Love, analyst for Kropf & Love Consulting.

 

Analysts say the market is poised to break out of its narrowing trading range, with a significant price move one way or the other.

 

CBOT oats futures ended slightly higher. March oats ended up 2 cents to US$2.15 per bushel and May oats ended up 2 cents to US$2.24 1/2.

 

Ethanol futures were higher. February ethanol ended up US$0.018 to US$1.596 per gallon and March ethanol ended up US$0.015 to US$1.600.