March 19, 2008

 

CBOT Corn Review on Tuesday: Rallies on technically inspired buying

 

 

Chicago Board of Trade corn futures ended higher Tuesday, bouncing back from Monday's limit-down slide on technically motivated buying, analysts said.

 

May corn settled 8 cents higher at US$5.47 1/4, July corn ended 8 cents higher at US$5.59 1/4, and December finished 6 1/4 cents higher at US$5.61 1/2.

 

The market found its footing on technically inspired buying and a fundamental bias tied to the potential for early planting delays in the corn belt, a CBOT floor analyst said.

 

The ability of active corn futures to hold key technical support in overnight trade provided some bullish optimism to traders, and with outside markets firmer and worries cool, wet southern Midwest weather could delay early field operations, buyers were encouraged, analysts added.

 

The May and December corn contracts each held their March 10 lows and 50-day moving averages in overnight electronic trade.

 

Oversold market conditions helped attract buying as well. Traders cited the uncertainties of 2008 acreage, the U.S. economy and demand as catalysts underpinning prices, traders said.

 

The prospect of planting delays further aided the recovery from the lows, with nearby contracts benefiting from ideas any slowdown in plantings will entice farmers to remain tightfisted with supplies in the event of tightening inventories down the line, an analyst added.

 

The DTN Meteorlogix Weather forecast said rains may be very heavy in the eastern Midwest during the next 24-48 hours. This pattern continues to point toward delays to early spring fieldwork in the area. It is possible that many areas of the region south of Interstate 70 will not see fieldwork before the end of March due to the persistent rains and wet soils.

 

In pit trades, JP Morgan bought 1,200 December, Newedge bought 500 May and sold 800 May. Speculative fund buying was estimated near 7,000 lots. CBOT oat futures ended modestly higher in a bounce from sharp losses, a floor trader said. There was some spillover support from gains in neighboring markets, he said. May oats closed 5 1/2 cents higher at US$3.78 per bushel.

 

Ethanol futures ended mixed. April ethanol rose 5.1 cents to US$2.42 per gallon, and May slipped 1.5 cents to US$2.375.