February 5, 2010

 

CBOT Corn Review on Thursday: Ends up slightly after new early lows

 

 

Chicago Board of Trade corn futures shook off early losses, downside technical momentum and bearish outside markets to end slightly higher Thursday.

 

March corn ended up 1 cent to US$3.54 per bushel, and May corn settled up 3/4 cent to US$3.65 1/4.

 

The March contract set a new four-month low in early trading and fell below key support at US$3.50, but mounted what traders said was an impressive rebound.

 

"It's doing pretty well considering it's had all the bearish news you can throw at it but the kitchen sink," said John Kleist, broker/analyst for Allendale.

 

Tumbling prices in other commodities, such as gold and crude oil, along with sharply lower equities and a stronger dollar, all provided a significant headwind to upside movement. But prices traded around unchanged for much of the latter half of the day, and eked out gains late.

 

Commercial buying and the reluctance of farmers to sell has underpinned the market, traders said. Traders note a change of ownership, with recently climbing open interest indicating new short positions by speculators and new long positions by commercial funds.

 

One trader also speculated that given Thursday's price action, index funds might be moving out of crude oil and other commodities and into grains.

 

Kleist said that Thursday's modest gains following the early low might indicate a "mini-reversal" but that bulls had more work to do to change the recent downward trend.

 

Large supplies are the key bearish factor in the market. In addition to a big U.S. 2009 crop and expectations of more planted acres in 2010, traders are expecting the U.S. Department of Agriculture to increase the size of South American crops in Tuesday's supply and demand report.

 

Analysts surveyed by Dow Jones Newswires expect on average the USDA to peg 2009-10 U.S. corn ending stocks at 1.748 billion bushels, down slightly from a January estimate of 1.764 billion but above the prior year's total of 1.673 billion.

 

CBOT oats futures ended lower. February ethanol ended down 2 1/4 cents to US$2.28 3/4 per bushel and March ethanol closed down 2 1/4 cents to US$2.38.

 

Ethanol futures were lower. March ethanol ended down US$0.006 to US$1.775 per gallon and April ethanol settled down US$0.007 to US$1.778.