February 3, 2010

 

CBOT Corn Review on Tuesday: Ends higher in technical rebound

 

 

Chicago Board of Trade corn ended higher Tuesday in a technical rebound amid support from outside markets, traders said.

 

March corn ended up 6 cents to US$3.65 per bushel and May corn ended up 6 cents to US$3.76 1/4.

 

Outside macro markets, particularly a weaker dollar and surging crude oil, set the tonnee for corn and other commodities, traders said.

 

Sid Love, analyst for Kropf and Love Consulting, said the recent slide was exacerbated by strength in the dollar, and that its retreat is helping corn regain its footing.

 

"It shows how much we trade outside markets sometimes rather than corn fundamentals," Love said.

 

Fundamentally there was no supportive news in the market, said traders, a couple of whom referred to gains this week as a "dead cat bounce."

 

Big U.S. supplies and expectations of strong South American crops have been the key bearish factors in the market recently.

 

But traders do note farmers' reluctance to sell after the recent price plunge, saying that is providing underpinning support. Traders say the market's upside is still limited, although Love said the trend may now be sideways rather than lower.

 

Wheat and soy led the way higher Tuesday, as both climbed more than a dime.

 

In other news, the head of Corn Products International Inc. (CPO) on Tuesday forecast that soft drink volumes in the U.S. would drop by 1% to 2% this year amid a "generational" shift in consumption.

 

Ilene Gordon, chairman and chief executive of the sweetener and starch specialist, also said the quality of the latest U.S. corn crop was "fine", dampening concern that the late harvest could impact users.

 

Some traders have warned that deteriorating quality once the weather starts to warm could force farmers to unload as quickly as they are able. They say the market is not yet paying attention to this, but that quality will become a bearish factor in the market.

 

CBOT oats futures ended higher. March oats ended up 4 cents to US$2.32 per bushel and May oats climbed 3 3/4 cents to US$2.41 1/4.

 

Ethanol futures were higher. February ethanol ended up US$0.024 to US$1.817 per gallon and March ethanol closed up US$0.026 to US$1.808.