February 20, 2010

CBOT Corn Review on Friday: End up on short covering, outside support

 

 

Corn futures on the Chicago Board of Trade ended higher Friday, bouncing off earlier lows on end-of-week short covering and spillover strength from a rebound in crude oil and metal futures.

 

March corn ended up 2 3/4 cents, or 0.77%, at US$3.60 a bushel, and May corn ended 2 3/4 cents higher, or 0.75%, at US$3.71 3/4 a bushel. Speculative fund buying was estimated at 5,000 lots.

 

The market found some decent support to offset the negative impact of a strong U.S. dollar, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.

 

"The ability of corn futures to fight off an early attempt to push prices lower amid outside dollar-denominated commodities rebounding and strong weekly export sales raised trader confidence that downside pressure was limited," McCambridge said.

 

Nevertheless, futures remain in a consolidative range-bound trend, with little conviction on either side of the market. The absence of fresh news continued to keep traders cautious, as they look ahead to key government reports in March.

 

Ample domestic and world supplies, coupled with favorable conditions for South American crops, helped limit upside movement, with traders anticipating sideways price movement until 2010 crop considerations are brought into play, McCambridge said.

 

There are just not a lot of 2009/10 marketing year issues out there that haven't been traded already, he added.

 

Weekly U.S. corn export sales of 974,600 tonnes were strong and above trade expectations of 550,000 to 850,000 tonnes. The export sales, all for delivery in 2009-10, were up 31% from the previous week but down 7% from the prior four-week average, according to the U.S. Department of Agriculture.

 

The USDA, at its annual Agricultural Outlook Forum, estimated U.S. 2010-11 corn production at 13.16 billion bushels, with planted area estimated at 89 million acres. The production estimate is virtually unchanged from last year, but acreage is seen up 3%.

 

CBOT oat futures ended lower. March oats dropped 5 cents, or 2.13%, to US$2.30 a bushel, and May oats finished 5 cents lower, or 2.05%, at US$2.39.

 

Ethanol futures ended higher. March ethanol finished US$0.003, or 1.77%, higher at US$1.705 a gallon, and April ethanol ended up US$0.001, or 0.05%, at US$1.701.