March 20, 2009

 

CBOT Corn Review on Thursday: Climbs on dollar, limited by farmer sales

 

 

Weakness in the U.S. dollar pushed CBOT corn futures higher Thursday, although traders continue to note strong resistance at US$4.

 

May corn was up 8 1/4 cents to US$3.96 1/2 per bushel, July corn ended up 8 1/2 cents to US$4.07 and December corn settled up 9 1/4 cents to 44.28 1/4.

 

The plunge in the dollar set the tonnee for corn and other commodities, traders said. Crude oil was supportive, closing above US$50 for the first time this year, and neighboring wheat and soybeans posted strong gains that helped lift corn.

 

The May contract, after closing below the 100-day moving average Wednesday, surged back above that average Thursday. But traders and analysts said there could be limited upside potential, as the market struggles to hold above psychological resistance at US$4. The market climbed as high as US$4.02 in the March contract in early trading but soon retreated.

 

"Massive farmer selling again near US$4 in the corn, that's the bottom line," a trader said.

 

Other than concerns about inflation and the movement in the dollar, corn has little news of its own moving the market, analysts said.

 

Relatively weak export sales released Thursday highlighted the fact that "demand is still not up to snuff," said Joel Karlin, analyst for Western Milling.

 

"We have started to see export sales taper off from the good pace of January and February," he said.

 

Feed demand is also weak, he said, and the recent improvement in ethanol margins has stalled because of the 50-cent rally in corn this month.

 

The trade continues to keep an eye on upcoming planting season, and some expect the market to show little direction until the March 31 planting intentions and quarterly grain stocks reports from the U.S. Department of Agriculture. Some say the weather in the U.S. Midwest could be pointing to an early spring, which would help get planting off to a good start.

 

Karlin said the market appears rangebound, between US$4 on the top and around US$3.63 on the bottom.

 

CBOT oats futures climbed Thursday, with the nearby contract closing above US$2 for the first time since Jan. 30. A trader said that producers were starting to sell due to recent increases, but that given the recent plunge in the dollar they have instead decided to wait longer to see if the market can climb further. May oats were up 7 3/4 cents to US$2.01 per bushel and July oats were up 7 3/4 cents to US$2.09 3/4.

 

Ethanol futures were higher. May ethanol was up US$0.036 to US$1.603 per gallon and June ethanol ended up US$0.041 to US$1.636.