April 15, 2009

 

CBOT Corn Review on Tuesday: Ends higher as market follows soybeans

 

 

Chicago Board of Trade corn futures ended higher Tuesday, holding onto early gains thanks to strength in soybeans, traders said.

 

May corn ended up 6 3/4 cents at US$3.94 1/4 per bushel, July corn ended up 6 1/4 cents at US$4.03 1/2, and December corn settled up 5 1/2 cents at US$4.24 3/4.

 

"I think we saw some snapback after the inability to go lower yesterday, and finding lows in the overnight," said Dave Marhsall, an independent marketing adviser and commodity broker in southern Illinois. "I think we just finally just chased some of the guys who had been short in the market out of the market today."

 

A trader said there was speculative buying at the open, which caused the market to "blow by some (buy) stops," which caused the market to rally further. But the rally ran out of gas before hitting US$4, prompting some profit-taking, the trader said.

 

The market remains range-bound. A continued surge in soybeans has prevented corn from seeing significant losses, but the market has for weeks had trouble sustaining gains above US$4 in the nearby contract, as farmer selling weighs.

 

Marshall said the corn market is "levitating" much like the crude oil market. Corn is hovering around US$4, while crude oil hovers around US$50 per barrel, he notes. Concerns about demand has grounded both markets, which are tied together through ethanol, he said.

 

Concerns about delayed planting are giving some underlying support. Marshall noted that none of the 18 states listed in Monday's crop progress report from the U.S. Department of Agriculture had above-average planting progress.

 

Still, "the markets have been saying 'don't worry, we can catch up,'" Marshall said.

 

A trader said the weather is turning bearish, with drier weather expected next week in the U.S. corn belt, particularly in western areas.

 

The corn market continues to get support from soybeans; soybeans' strong gains in old-crop months were reflected in by the stronger gains in old-crop corn. Corn does not share the bullish fundamentals of soybeans, traders said.

 

CBOT oats futures ended slightly lower. May oats ended down 1 cent at US$1.92 per bushel and July oats ended down 1 cent at US$2.01.

 

Ethanol futures were slightly higher. May ethanol was up US$0.018 at US$1.569 per gallon and June ethanol was up US$0.003 at US$1.582.