April 3, 2009

 

CBOT Corn Review on Thursday: Surpasses US$4 on exports, equities, crude

 

 

Strong export sales and a surging stock market helped lift Chicago Board of Trade corn futures higher Thursday.

 

May corn ended up 6 1/2 cents to US$4.02 1/2 per bushel and July corn ended up 6 1/2 cents to US$4.12 3/4.

 

The rally was sparked by sharply higher equities, with the export sales and higher crude oil providing more fuel for the climb, traders said. Corn closed above US$4 in the nearby contract for the first time since Jan. 26, although the market trimmed gains after climbing as high as US$4.07 1/4 early in the session.

 

"It was an OK close," a floor trader said. "I wouldn't say it feels good, but technically you're intact."

 

Traders said farmer selling wasn't as heavy as it had been during previous recent tests of the US$4 area. But corn's gains were modest compared to those in wheat and soybeans, which both climbed about 25 cents. Soybeans have soared since Tuesday's planting intentions report from the U.S. Department of Agriculture projected far fewer planted acres than expected.

 

The market is in a "two steps forward, one step back" mode, but "new money continues to flow in," another trader said. Funds bought an estimated 6,000 contracts.

 

Weekly net export sales exceeding 1 million metric tonnes announced Thursday weren't a big surprise because of recently announced sales to South Korea, but still highlighted the rebound in export demand in recent weeks.

 

Forecasts of wet weather in the U.S. corn belt this month are also supportive, according to some traders and analysts.

 

"The corn market now probably turns to the weather forecasters for direction, along with the outside markets," Linn Group analyst Jim Riley said in a market commentary. "The current weather forecast has much of the Midwest receiving rain over the next week or two, which will delay corn plantings, and some of these areas are already wet and don't need anymore rain."

 

Some traders say it is too soon to be talking much about the weather, but acknowledge it is nonetheless a factor in the market.

 

CBOT oats futures ended higher on outside support. May oats ended up 7 cents to US$1.97 1/2 per bushel and July oats ended up 7 cents to US$2.07.

 

Ethanol futures ended higher. May ethanol ended up US$0.017 to US$1.592 per gallon and June ethanol ended up US$0.021 to US$1.615.