March 5, 2009

 

CBOT Corn Review on Wednesday: Gains maintained on outside market strength

 

 

Chicago Board of Trade corn futures maintained gains Wednesday, closing near the top of the day's trading range. Corn was bolstered by strength in crude oil, equities, traders and analysts said.

 

March corn gained 11 3/4 cents at US$3.55 1/4. The most actively traded May corn contract added 13 cents to US$3.63 1/2. The contract traded in an 8 1/2-cent range, topping at US$3.64 1/2. July corn gained 13 cents to US$3.72 3/4.

 

Speculative funds bought an estimated 5,000 CBOT corn contracts, according to midday-close estimates.

 

"With the equities rallying and grain oversold, we got a recovery in the corn market," said Jay Fitzgerald, a broker at Advance Trading. "It's not like demand picked up dramatically."

 

With corn exports still lagging the previous year by about 50% as global economic woes challenge demand, Fitzgerald said he hopes to see a better export report when the USDA releases its weekly export sales report Thursday at 8:30 EST.

 

Spread trades were active Wednesday, a CBOT floor trader said, noting about the May-July spread was most popular with 40,000 traded.

 

March-May and May-December spreads were the next most active, he added.

 

In addition to outside markets, corn futures also received support from neighboring soybeans, said Alan Brugler, president of Brugler Marketing and Management.

 

U.S. dollar strength added top-side pressure, while cash corn bids around the Midwest were steady-to-firm with light farmer selling as of midday, Brugler added.

 

"Market sentiment that continuing conflicts between Argentine farmer groups and the Argentine government may inhibit Argentine corn exports provides support to U.S. corn futures as well," Brugler said.

 

Severe drought is expected to curtail Argentina's corn production by 36% to 14 million tonnes, the Rosario Grain Exchange said in a special report Wednesday.

 

Decreased spending on fertilizer also limited this year's production, the report said.

 

In other markets, CBOT May oat futures closed up 2 3/4 cents at US$1.87 3/4 a bushel.

 

Ethanol futures gained US$0.057 cents to US$1.549 a gallon in the nearby March contract. May ethanol added US$0.045 cents to US$1.540.