March 13, 2009

 

CBOT Corn Review on Thursday: Surges on outside support, export sales

 

 

Climbing equities, solid export sales and technical strength sent CBOT corn futures surging Thursday, traders said.

 

March corn ended up 20 3/4 cents to US$3.76 3/4 a bushel, May corn ended up 20 3/4 cents to US$3.85 1/4 and July corn ended up 21 cents to US$3.95 1/2.

 

A third straight day of gains in equities fueled the bullish sentiment, and the market hit buy stops on its way up, fueling its climb above key moving averages, traders said. The May contract surged above its 10-day, 20-day and 50-day moving averages and is within sight of its 100-day average at US$3.90 3/4, which corn hasn't closed above since July.

 

A trader said volume was heavy, and he suspects that as with other markets, a lot of corn's ascent was due to short covering.

 

The May contract is likely to make a run at the US$4 mark, said Western Milling analyst Joel Karlin. He said Wednesday's supply-and-demand report was friendly for corn, although he also noted skepticism about a projected increase in ethanol production.

 

"Perhaps the most bullish fundamental factor may be ideas that the March 31 report is going to show corn acres down at least 2 million, maybe a little bit more," Karlin adds.

 

Traders said expectations that a private firm would release a bullish projection for corn planted acres on Friday were supportive. Soaring crude oil prices also fueled the rally, they said.

 

One trader says the market was overdone to the downside Wednesday. "I think we're in a market that doesn't have a lot of confidence in either direction," he said.

 

Karlin said there was some spread trading, with buying of corn and selling of wheat and soybeans, although those markets also posted strong gains.

 

Wednesday's supply/demand report highlighted a shift in sentiment this week about ethanol, as it increased projected ethanol usage by 100 million bushels. Traders also say that U.S. Secretary of Agriculture Tom Vilsack's comments this week in support increasing ethanol blending has supported corn prices.

 

CBOT oats futures climbed along with neighboring markets. May oats were up 5 1/4 cents to US$1.87 a bushel and July oats were up 5 1/4 cents to US$1.96.

 

Ethanol futures ended higher. May ethanol ended up US$0.041 to US$1.570 a gallon and June ethanol up US$0.046 at US$1.580.