February 7, 2009

 

CBOT Corn Review on Friday: Climbs on soy, weather; USDA positioning

 

 

Chicago Board of Trade corn futures climbed Friday amid support from soybeans, dry South American weather and positioning ahead of government supply and demand reports next week, traders said.

 

March corn ended up 6 cents to US$3.77 1/4 per bushel, May corn ended up 6 cents to US$3.87 1/2, and July corn ended up 6 1/4 cents to US$3.97 3/4.

 

The trade is expecting a bullish increase in U.S. ending stocks and reductions in crops in Brazil and Argentina in next week's reports, said Dave Marshall, independent broker and advisor in Nashville, Ill. The U.S. Department of Agriculture will issue its updated supply and demand tables Tuesday at 8:30 a.m. EST.

 

The market ended sandwiched between major moving averages. The March contract is above its 10-day average but below its 20-day and 50-day, all of which are between US$3.75 and US$3.80.

 

Some believe the market has set a seasonal low, although traders also caution that demand is far from bullish, even with three consecutive weeks of strong export sales.

 

"Are we heading back to US$4? I have a tough time believing that," a trader says, citing weak demand.

 

Farmer selling remains slow but will pick up soon, adding pressure to the market, traders said.

 

"Producers continue to be tight holders, although we did see a little more movement in the past couple days," Marshall said.

 

Overall the trade remains concerned about a drier weather pattern expected to emerge next week for Argentina and Brazil. But wetter forecasts that emerged during mid-day trading limited corn's gains Friday, traders said.

 

Corn has an earlier growing season and at this stage has already suffered significant losses. The weather can have a more direct impact on the soybean market, a trader said, because the final soybean crop production in South America is still "a moving target," according to a trader.

 

Analysts project the USDA will cut production estimates for corn and soybeans for both Brazil and Argentina in Tuesday's report.

 

The analysts' average projected U.S. carryout is 1.838 billion bushels, which would be up from the USDA's estimate of 1.790 billion bushels last month, and higher than the 2007-08 carryout of 1.624 billion.

 

The estimates from the 14 analysts surveyed by Dow Jones Newswires ranged from 1.740 billion to 1.940 billion.

 

CBOT oats futures ended slightly higher. March oats gained 2 cents to US$1.95 per bushel and May oats ended up 2 cents to US$2.04 1/2.

 

Ethanol futures ended higher. March ethanol ended up US$0.014 to US$1.611 per gallon and May ethanol climbed US$0.025 to US$1.645.