March 25, 2008

 

CBOT Corn Review on Monday: Retraces prior losses on technical buying

 

 

Chicago Board of Trade corn futures ended sharply higher Monday, retracing most of Thursday's losses on technically inspired buying amid oversold market conditions.

 

May corn settled 17 1/4 cents higher at US$5.24 3/4, July corn ended 17 3/4 cents higher at US$5.37, and December finished 18 1/2 cents higher at US$5.39 3/4.

 

The technical outlook of the market was oversold, outside financial markets displayed stability and underlying fundamentals remain supportive, opening the door for a broadbased recovery, said Shawn McCambridge, senior grains analyst with Prudential Bache Commodities in Chicago.

 

The market had time to digest last week's heavy losses over the extended holiday weekend, and with the perception losses were not fundamentally related, futures rebounded in the absence of speculative fund selling, he added.

 

The market benefited from bullish underlying fundamentals as well, with psychological support stemming from flooding in the southern corn belt aiding gains, traders added.

 

With outlooks for a significant reduction in U.S. corn planted acreage, the market is sensitive to real and perceived threats to production, McCambridge said.

 

Looking forward, the market is seen holding a firmer bias heading toward next week's planting intentions report, as smaller projected 2008 U.S. corn acreage and weather uncertainties support prices, he added.

 

Meanwhile, very wet conditions appear likely in the southern Ohio Valley through the first week of April, Cropcast Weather Services says in a forecast. The latest forecast suggest that two rain systems will pass through already wet areas between Thursday and Sunday, with another event next Tuesday and two more in the 11- to 15-day period, Cropcast says. These very active storm systems are likely to provide an additional 3-6 inches of rainfall during the next two weeks, Cropcast forecasts. Early attempts at spring fieldwork appear quite unlikely to occur in these areas, Cropcast added.

 

In pit trades, buyers and sellers were scattered among various commission houses. Speculative fund buying was estimated at 5,000 lots.

 

CBOT oat futures closed lower, bucking the firmer trend in the grains. Speculative selling weighed on the market, a trader said. May oats slipped 3 1/4 cents to US$3.35 3/4 per bushel.

 

Ethanol futures ended firmer. April ethanol closed up 6 cents at US$2.42 per gallon, while May ethanol closed up 5.9 cents at US$2.375.