February 26, 2009

CBOT Corn Review on Wednesday: Gains on short covering, late buy stops hit

Chicago Board of Trade corn futures ended higher and nearer the session high Wednesday. Short covering and bargain-hunting buying were featured, with fresh buy stop orders being triggered to boost prices even higher in late trading.

May corn closed up 10 cents at US$3.73 a bushel. July corn closed up 10 1/4 cents at US$3.82 3/4 a bushel.

Floor traders said corn futures hit buy stop orders on the late rally, uncovering orders totaling about 7,000 lots in a five-minute period.

The key "outside markets" were in a neutral posture for corn futures Wednesday. Crude oil futures were solidly higher, while the value of the U.S. dollar was stronger against the other major currencies. The U.S. stock indexes were weaker during the trading session, which did temper gains in corn somewhat.

Fundamentally, "expectations for a lower corn acreage projection from USDA in the Outlook Forum, which begins Thursday, added to price strength as did sharply higher crude oil futures," said Brian Grete, senior market analyst with the Pro Farmer advisory newsletter. USDA will issue its latest U.S. acreage forecast Friday morning. Most traders expect fewer corn acres to be planted this year versus last year, with those lost corn acres being added mostly to soybean acres.

Added Grete, "As old-crop corn futures pushed above downtrending resistance from the January highs, technical-based buying kicked in." However, "until the corn market can show sustained strength, gains will remain mostly corrective in nature," said Grete.

Spread trading has been active this week, said a trader. Traders are rolling out of the March contract with first-notice day approaching on Friday. Open interest in corn is presently at a multi-year low, the trader said.

Traders are awaiting Thursday morning's weekly USDA export sales data, due out at 8:30 a.m. EST. Recent strong export sales figures in corn have provided underlying support for the corn market.

Also mildly supportive for the corn futures market is talk that farmers in Argentina are again disgruntled and could stage a strike soon.