March 7, 2009

 

CBOT Corn Review on Friday: Posts single-digit gains in limited range

 

 

Chicago Board of Trade corn futures posted single-digit gains in a limited trading range Friday. Higher crude oil and a lower U.S. dollar index added support, traders and analysts noted.

 

March corn added 3 1/2 cents at US$3.52 3/4. The most actively traded May corn contract gained 3 cents to US$3.61 1/2. The contract traded a 5 1/2-cent range, topping at US$3.65 1/2. July corn rose 3 1/4 cents to US$3.71.

 

Speculative funds bought an estimated 3,000 CBOT corn contracts, according to midday estimates.

 

The fundamentals of corn have been improving over the past five to six weeks, said analyst Jason Ward of Northstar Commodities.

 

"Export demand has gone from unbelievably pathetic to downright impressive," he said.

 

Improved sales are linked to near-record Japanese buying power and South Korea's move back into the U.S. corn market after a period of substituting cheaper feed wheat, Ward said.

 

The first 19 weeks of the marketing year showed the weakest start in 10 years for corn sales, but they've started to correct the trend over the last seven weeks, he said.

 

"We've recovered from the first 19 weeks and started to lower the weekly target we need to sell each week to make the USDA's annual export sales target," he said.

 

Cash markets are still pretty strong for corn and the market is hesitant to head much lower ahead of planting season, but "gaining traction to the upside is tough when the outsides are weaker," a CBOT floor trader said.

 

Ward said he expects corn to gain 30-40 cents within the next 45 days.

 

He noted that ethanol production has edged back into profitable territory. While dairy, hogs and cattle are still facing negative margins, their profit margins are moving "closer to par," Ward said.

 

The U.S. Department of Agriculture's updated supply and demand report is due for release at 7:30 a.m. EDT Wednesday.

 

Analysts expect corn ending stocks for the 2008-09 season to average 1.811 billion bushels. The estimates of the 13 analysts polled by Dow Jones Newswires ranged 1.710 billion to 1.944 billion bushels.

 

In other markets, CBOT May oat futures closed down 1 3/4 cents at US$1.82 3/4 a bushel.

 

Ethanol futures lost US$0.007 cents to US$1.508 in the May contract. March ethanol was not traded.