April 1, 2009

 

CBOT Corn Review on Tuesday: Surges on soy, crude, end-month buying

 

 

Chicago Board of Trade corn futures surged into Tuesday's close, posting strong gains on support from soybeans, crude oil and end-of-month position squaring, traders said.

 

The nearby contract closed above US$4 for the first time since Jan. 26. May corn ended up 18 1/2 cents at US$4.04 3/4, July corn ended up 18 cents at US$4.14 3/4, and December corn ended up 17 1/2 cents at US$4.35 3/4.

 

Sharply higher soybeans lifted corn and other grains, analysts said. The soy market was bolstered by the U.S. Department of Agriculture's planting intentions report, which projected acreage to be much lower than analysts had expected.

 

Corn was slow to follow, as many traders and analysts considered the USDA's report just mildly supportive, at best. But corn and other markets steadily climbed throughout the day, amid ideas that the report was supportive for the grains and oilseeds markets overall.

 

"The supply and demand scenario over a 24-hour period has gotten quite a bit tighter, collectively, across these major grains," said Bill Nelson, analyst with Doane Advisory Services.

 

The USDA projected corn acreage at 84.986 million acres, down from last year's total of 86 million but slightly above analysts' expectations. The USDA also issued a quarterly grain stocks report, which showed stocks higher than last year at the same time but lower than analysts' expectations.

 

Nelson and others said the market's late surge was in part due to gains in crude oil. A trader said the late rally - corn climbed by more than a dime in the last 30 minutes - was due to positioning at the end of the month and quarter.

 

"It just came out of the blue," the trader said. "I think they're trying to dress this thing up."

 

Some traders add that the market has support from U.S. corn belt weather, which will become a stronger focus of the market now that the planting intentions report has been released. Forecasts for wet, chilly weather in the corn belt has raised concerns about early planting being delayed, although some analysts say it's still too early to be very worried.

 

CBOT oats futures settled virtually unchanged. July oats ended up 1/2 cent at US$2.02 1/2 per bushel, but all other contracts ended flat. Nearby May oats settled at US$1.93.

 

Ethanol futures were higher. May ethanol was up US$0.015 at US$1.583 per gallon and June ethanol ended up US$0.022 at US$1.622.