January 26, 2010

 

CBOT Corn Review on Monday: Higher in modest technical bounce

 

 

Chicago Board of Trade corn futures ended higher Monday in a slight technical bounce following recent losses, traders said.

 

March corn ended up 3 cents to US$3.67 3/4 per bushel, and May corn ended up 3 1/4 cents to US$3.78 3/4.

 

Traders said there was little fundamental reason for the market to climb, and little expectation that Monday's gains would be the start of an extended rally. A few said the market was merely oversold.

 

But traders also said there were signs that after falling roughly 60 cents the past couple of weeks, the market is at a point where further significant losses are unlikely, at least in the short-term.

 

"I would say the price drop, in conjunction with the weekly export sales, in conjunction with the commitment of traders report, is suggesting that some of the downside pressures may start to lessen," says John Kleist, broker/analyst with Allendale.

 

Traders said that Friday's supplemental commitments of traders report from the Commodity Futures Trading Commission showed a huge shift of ownership to commercial funds, as speculative funds liquidated.

 

Kleist said that while the shift wasn't "immediately bullish," commercial funds can be the "leading indicator of a market that's in the process of turning."

 

Traders added that export sales reported last week were extremely strong, although weekly export inspections, reported Monday, were below expectations.

 

Funds sold an estimated 5,000 contracts Monday.

 

A floor trader said that the market is following seasonal trends lower, and that prices might move sideways before dropping another step.

 

Kleist added that intermarket spreads with wheat and soy had gotten "out of whack" last week, and that Monday's gains might have been prompted by a correction in those spreads.

 

Fundamentally, the market is facing a huge 2009 crop and an expected increase in corn acreage in 2010.

 

CBOT oats futures ended higher Monday. March oats ended up 1/4 cent to US$2.33 1/4 per bushel and May oats settled up 1/4 cent to US$2.42 1/4.

 

Ethanol futures were stronger. February ethanol closed up US$0.024 to US$1.807 per gallon and March ethanol ended up US$0.021 to US$1.800.