February 24, 2009

 

CBOT Corn Review on Monday: Modest rebound on short-covering, exports

 

 

Chicago Board of Trade corn futures ended slightly higher Monday amid short-covering, with recent strong export sales providing support.

 

March corn ended up 1 1/2 cents to US$3.51 3/4 per bushel, May corn ended up 1 3/4 cents to US$3.60 3/4, and July corn ended up 2 1/4 cents to US$3.70 3/4.

 

The market's recent slide below US$3.50 was overdone, traders said, which led to short-covering Monday. Analysts noted that U.S. corn continues to find buyers at prices around US$3.50. Export sales have been strong for five straight weeks, and more buying by South Korea announced Monday morning served as a reminder of that demand.

 

But analysts added that the demand picture is still far from bullish, due to the weak global economy.

 

"If there's no overtly bearish world financial problems again, the March corn has found value in this area," said John Kleist, broker/analyst for Allendale.

 

The market opened higher following overnight gains but was unable to maintain that strength as crude oil, the dollar and equities weighed, traders said. One trader said the greatest influence on the market was fluctuation in the dollar.

 

Corn was caught between wheat, which fell 8 to 9 cents, and soybeans, which climbed more than a dime.

 

The market had traded for weeks between US$3.50 and US$4 before dipping below that range last week. But traders and analysts noted that the market ended last week just above US$3.50. Kleist said a new range for the market might be between US$3.50 and US$3.75.

 

He said that there was heavy liquidation late last week in the March contract, which could be supportive because "a chunk of selling is gone."

 

U.S. corn export inspections totaled 26.386 million bushels, down from 34.522 million the previous week, the U.S. Department of Agriculture reported Monday. Analysts had estimated between 28 million and 35 million bushels.

 

CBOT oats futures rebounded Monday. March oats were up 8 1/2 cents to US$1.77 per bushel and May oats were up 8 1/2 cents to US$1.86 1/2. The March contract had lost 16 cents last week.

 

Ethanol futures were higher. March ethanol ended up US$0.029 to US$1.548 per gallon.