February 25, 2009

 

CBOT Corn Review on Tuesday: Higher on outsides; support around US$3.50

 

 

Chicago Board of Trade corn futures ended higher Tuesday, climbing late on outside markets and continued support around the US$3.50 area, traders and analysts said.

 

March corn ended up 2 1/2 cents to US$3.54 1/4, May corn ended up 2 1/4 cents to US$3.63, and July corn ended up 1 3/4 cents to US$3.72 1/2.

 

Despite the market's weeks-long downward trend, "I still believe corn has a solid fundamental reason not to go lower," said Arlan Suderman, analyst for Farm Futures. The market has continued to find demand at current price levels, Suderman and other analysts said.

 

But traders and analysts say any sustained rally is unlikely, and that corn prices would dip further if the financial and energy sectors continue their plunge.

 

Outside markets, which have been a bearish force, supported corn Tuesday. The market was slightly lower for most of the day before climbing late as the dollar retreated, a trader said. Equities also rebounded, analysts noted.

 

Traders said some light short-covering ahead of President Barack Obama's speech Tuesday night also likely contributed to the late climb.

 

Some analysts also note that although the market hasn't fallen precipitously, it is nonetheless a long-term downward trend.

 

"The thing I have a concern with right now is that from that early January ... high, we're in a classic downturn with a series of lower lows and lower highs," said Chad Henderson, an analyst with Prime Ag Consultants.

 

Suderman said corn prices need to be high enough to give farmers an incentive to plant. He said any sustained rally is going to have to be based on the 2009 crop, but that any significant news about planted acres is still likely weeks away.

 

Although export demand has rebounded, analysts say feed and ethanol demand remains poor due to the economy.

 

CBOT oats futures ended unchanged. March oats closed at US$1.77 per bushel and May oats ended at US$1.86 1/2.

 

Ethanol futures were mixed. March ethanol ended down US$0.003 to US$1.545 per gallon and May ethanol ended down US$0.010 to US$1.550.