January 29, 2009
CBOT Corn Review on Wednesday: Rebounds as Argentina concerns support
Chicago Board of Trade corn futures rebounded Wednesday, as concerns about the crop in Argentina continue to give the market underlying support, traders said.
March corn ended up 7 cents to US$3.84 1/2 per bushel, May corn ended up 7 cents to US$3.95 1/2, and July corn ended up 7 cents to US$4.06 1/4.
The market dipped early in the session following overnight losses, but there was a lack of follow-through selling, which indicates rain in the forecast for Argentina has been priced in, an analyst said.
Forecasts are calling for rain this week, but one trader said midday weather updates were drier, and another said the market is still fearful of substantial crop losses.
"We're still looking for good rain in South America, but it's not in the gauges yet," a trader said.
Crude oil was choppy but ended higher, adding support Wednesday, traders said.
The market is trapped in a "dead zone" between US$3.50 and US$4 in the March contract, said Chad Henderson, analyst with Prime Ag Consultants. During the past eight sessions, it has traded between US$3.73 and US$4.02.
The upper end of the range is set by poor demand, while technical support is keeping prices from dipping sharply, analysts said.
Some analysts have said that the market would eventually break sharply one way or another out of the range, and after falling below the 10-day and 50-day moving averages Tuesday, some expected continued technical selling. But the market instead climbed back above those averages Wednesday. The 10-day moving average is US$3.83, and the 50-day average is US$3.79 3/4.
Traders and analysts are awaiting weekly export sales numbers from the U.S. Department of Agriculture on Thursday morning. Analysts are expecting anywhere from 350,000 to 900,000 metric tonnes in net sales following last week's marketing year high of 1.113 million.
CBOT oats futures climbed slightly. March oats ended up 2 cents to US$2.14 per bushel, and May oats ended up 2 cents to US$2.23 1/2.
Ethanol futures ended higher. February ethanol ended up US$0.025 to US$1.598 per gallon, and March ethanol climbed US$0.022 to US$1.597.
