February 12, 2010

 

CBOT Corn Review on Thursday: Ends higher for fourth consecutive day

 

 

Chicago Board of Trade corn futures extended this week's bounce on Thursday, ending higher but failing to take out the previous day's high.

 

March corn ended up 1 1/2 cents to US$3.63 1/4 per bushel, and May corn ended up 1 3/4 cents to US$3.75.

 

The market is solidifying technically, analysts said, but has yet to establish an upward trend. A lack of farmer selling continues to support the market, as it has recently strengthened basis, or the difference between cash and futures prices.

 

John Kleist, broker/analyst for Allendale, said the market is in a consolidation mode.

 

"Every time we get into the US$3.50s, we seem to find underlying support," he said.

 

However, Kleist said the market is unlikely to push any higher than US$3.75 in the near-term, and traders say farmers will be eager to unload on any significant rally. Underlying the expectations of farmer selling are concerns about the quality of the crop, which some analysts say could prompt farmers to unload more quickly once the weather warms.

 

The market climbed for the fourth straight day Thursday and is up 11 3/4 cents on the week. Winter weather has been supportive this week, analysts said, as it has helped keep cash prices firm and supported increased feed demand.

 

Funds bought an estimated 4,000 contracts Thursday.

 

The market is seen as range bound, and consolidation could continue Friday, ahead of the three-day holiday weekend, traders said.

 

In other news, U.S. corn farmers, spurred by rising ethanol production and solid demand from foreign markets, will continue to plant large crops over the next 10 years, according to a new long-term "baseline" report released Thursday by the U.S. Department of Agriculture.

 

Farmers planted 86.5 million acres of corn in 2009, according to the latest USDA estimate, which was released on Tuesday. The long-term forecast released Thursday shows corn acreage this year rising to 88 million acres and then 90 million acres in 2011.

 

Many traders and analysts expect farmers will plant even more than the 88 million projected this year.

 

There is a slight drop to 89.5 million acres in 2012, and the USDA's forecast remains unchanged through 2018 before the forecast for 2019 drops to 89 million acres.

 

CBOT oats ended virtually unchanged. March oats ended flat at US$2.32 1/4 per bushel and May oats closed up 1/4 cent to US$2.41.

 

Ethanol futures were lower. March ethanol ended down US$0.019 to US$1.729 per gallon and April ethanol closed down US$0.019 to US$1.732.