January 29, 2010
CBOT Corn Review on Thursday: Up on short-covering, though upside is limited
Chicago Board of Trade corn ended higher Thursday on short-covering in what traders said was an oversold market.
March corn ended up 3 1/2 cents at US$3.61 3/4 a bushel, and May corn ended up 3 1/2 cents at US$3.72 3/4.
Traders attributed the gains to the fact the market was oversold after falling sharply recently. Fundamentally, there's little to be excited about, analysts said, as the 2009 U.S. crop was large and it's too early to worry about the 2010 crop. The market is also facing what is expected to be a very strong crop in South America.
Weekly net export sales of 902,000 metric tonnes, released Thursday, were considered solid, but unspectacular.
Funds sold an estimated 4,000 contracts Thursday, and traders said speculative funds are still holding long positions that they want to get out of.
"The smart money continues to sell the rallies," a trader said.
Traders said the trend remains lower.
"Every time you get that 3-cent pop, you have people stepping up who are willing to sell it," said Shawn McCambridge, senior grains analyst with Prudential Bache. He said a downside objective is to push March prices below US$3.50.
Limiting the market's downside are farmers who don't want to sell at current prices and end-users filling some needs.
A floor trader said there could seen be another, sharper slide that flushes out holders of long positions and prompts farmers to sell. Producers have watched prices drop 70 cents in less than three weeks.
Seasonally the market usually drifts lower this time of year, traders and analysts said. The market is also facing pressure from bearish economic sentiment, which would indicate weaker demand, traders said.
CBOT oats futures ended higher. March oats ended up 4 1/4 cents at US$2.33 a bushel and May oats ended up 4 1/2 cents at US$2.42.
Ethanol futures were slightly lower. February ethanol closed up US$0.001 at US$1.784 a gallon and March ethanol settled up US$0.004 at US$1.778.
