February 6, 2009

 

CBOT Corn Review on Thursday: Ends higher on technical buying, export sales

 

 

Short covering, solid export sales and spillover support from wheat and soybeans pushed Chicago Board of Trade corn futures higher Thursday, traders said.

 

March corn ended up 13 cents to US$3.71 1/4, May corn climbed 12 3/4 cents to US$3.81 1/2, and July corn ended up 12 1/4 cents to US$3.91 1/2 per bushel.

 

Thursday's gains were based largely on technical support, as the market held above recent lows and followed wheat and soybeans higher, traders said.

 

"There's some support right around the US$3.55 area, and we weren't able to break it, so we sort of bounced a little higher here," said Joel Karlin, an analyst for Western Milling.

 

Weekly net export sales of more than 1 million metric tonnes reported Thursday signal that corn prices don't need to drop further to be competitive, a trader said, although analysts said the sales weren't strongly bullish.

 

Demand remains weak in general, although traders add that ethanol margins have improved recently. Karlin added that "there's a lot of chatter about rising freight rates, which could be a precursor of increased demand for bulk commodities."

 

Weather was also supportive, some traders said. Although Argentina has gotten much needed rain recently, the possibility of a re-emerging dry weather pattern next week in Argentina was cause for more concern, a trader said. The weather is having the most direct impact on soybeans, but rainfall is still needed to prevent greater losses in corn, analysts said.

 

Modestly higher crude oil and U.S. equities added support Thursday, and momentarily quieted concerns about the effects of a world recession on demand, an analyst said.

 

Corn's ability to hold above recent lows has prompted ideas that the market has set a seasonal low. The market typically drops in February, analysts say.

 

"We might have had (the low) early this year," a trader said.

 

Still, traders and analysts say upside potential is limited due to the weak demand.

 

CBOT oats futures ended higher Thursday. Assuming outside markets hold firm, oats may have set a bottom after dropping sharply in recent days amid technical selling, a trader said. March oats ended up 6 cents to US$1.93 per bushel and May oats ended up 6 cents to US$2.02 1/2.

 

Ethanol futures were higher. March ethanol ended up US$0.045 to US$1.597 per gallon and May ethanol climbed US$0.040 to US$1.620.