May 16, 2008

 

CBOT Corn Review on Thursday: Rebounds late on technical strength

 

 

Chicago Board of Trade corn futures ended slightly higher Thursday on a late technical rebound with buyers re-entering the market once prices neared six-week lows, a trader said.

 

July corn ended up 2 3/4 cents to US$5.99 per bushel, Sept. was up 3 cents to US$6.11 1/4 and Dec. was up 2 cents to US$6.22 1/2.

 

July corn, which had dipped as low as US$5.85 3/4, climbed back above its 50-day moving average of US$5.93.

 

Traders said the rally might have been sparked by news of a possible reconciliation in the Argentina farmer's strike. That sent soybeans lower, one trader said, ending the recent pattern of investors buying soybeans and selling corn. An end to the strike could prevent soybean demand from shifting from Argentina to the U.S.

 

Late in the day, one of four farm group leaders said they were likely to announce a continuation of the strike.

 

Crude oil also offered support late, as it finished on its own rally, a trader said.

 

"Commercial buyers started chasing it when it started to rally," a trader said.

 

Dry long-range weather forecasts for the U.S. Midwest provided downward pressure for most of the day as growers seek opportunities to get planting work done. Forecasts call for dry weather through Monday. On Thursday the National Oceanic and Atmospheric Administration predicted June, July and August temperatures would be below normal in the Midwest. Traders and farmers have said a summer heat wave could be especially damaging to corn this year since much of the crop is being planted late.

 

A trader noted conditions could be good for yields once corn is planted.

 

"There's lots of subsoil moisture now," he says. "So if they get it in, it will be pretty good."

 

An analyst said corn prices typically dip in the second half of May, as the market is in between weather fears - rainy weather in early May, and heatwaves in the summer.

 

"We've got some seasonal factors at work," Arlan Suderman, an analyst at Farm Futures said of losses this week. "And we'd gone a long time without a market correction."

 

He said corn still has "potentially bullish fundamentals" going into the growth season, including strong demand and a need for very strong yields in order to meet the U.S. Department of Agriculture's projection of 86 million total acres.

 

CBOT oats ended sharply lower on heavy commercial fund selling, a trader said. July oats closed down 13 1/2 cents to US$3.94 per bushel, but finished above the 50-day moving average of US$3.92. September oats were down 13 1/2 cents to US$4.05 and December oats were down 13 1/2 cents to US$4.20.

 

Ethanol futures were lower. June ethanol was down US$0.037 to US$2.454 per gallon and July ethanol was down US$0.011 to US$2.457.