February 10, 2010

 

CBOT Corn Review on Tuesday: Ends up on USDA report, dollar, equities

 

 

Chicago Board of Trade corn futures ended higher Tuesday on a friendly government ending-stocks projection and supportive outside macro markets.

 

March corn ended up 2 1/2 cents to US$3.58 1/2 per bushel, and May corn ended 2 3/4 cents higher at US$3.70 1/4.

 

The market was higher throughout the session despite retreating wheat and soy prices. Traders said the market had support from surging equities and a weaker dollar, which were influenced by talk of an aid package for Greece.

 

Traders said the USDA supply and demand report gave the market a little boost, as it lowered projected U.S. and world ending stocks. But after an initial surge, the market trimmed gains and ended four to five cents off the day's highs.

 

"Anyone who wants to be really bullish in here and was looking for something from this report has to be disappointed," says Prime Ag Consultants analyst Chad Henderson.

 

The market bled through January into February thanks to large U.S. supplies and expectations of large South American supplies. The USDA on Tuesday increased the projected size of Argentina's crop, as expected, but left Brazil's crop unchanged.

 

A trader said Tuesday's market was difficult to trade because of the uncertainty surrounding Greece's financial woes. Potential aid to Greece was seen as bearish for the dollar, which in turn is supportive to U.S. commodity prices.

 

Funds bought an estimated 7,000 contracts Tuesday.

 

Analysts said the market could be range-bound through the rest of the month into March, with little news on the horizon. Henderson said March prices could be stuck between US$3.50 and US$3.75.

 

In other news, Brazil's foreign trade commission, Camex, said Tuesday that Brazil's ethanol tariff will be maintained.

 

Camex officials met on Tuesday to assess whether Brazil's 20% tariff on imports of ethanol should be suspended.

 

Agriculture Minister Reinhold Stephanes said that the decision on suspending the tariff would be reassessed in June.

 

The decision will limit potential U.S. exports to Brazil, a prospect that analysts say would be supportive to corn prices. Even with the tariff, exporting to Brazil could potentially make economic sense to U.S. exporters based on current prices, analysts have said recently.

 

CBOT oats futures ended slightly lower. March oats ended down 1 cent to US$2.30 per bushel and May oats ended down 1 1/2 cents to US$2.38 1/2. Tuesday's USDA supply and demand report made no changes to the U.S. oats balance sheet.

 

Ethanol futures were virtually unchanged. March ethanol ended up US$0.004 to US$1.761 per gallon and May ethanol ended flat at US$1.760.