May 21, 2008

 

CBOT Corn Review on Tuesday: Up on crude support; gains trimmed

 

 

Chicago Board of Trade corn futures ended higher Tuesday as outside markets, particularly crude oil, helped fuel a rally, traders said.

 

July corn was up 3 cents to US$5.89 3/4 per bushel, September corn was up 3 cents to US$6.02 1/4 and December corn was up 3 cents to US$6.16.

 

Traders said record-high crude oil prices above USUS$129 per barrel helped lure buyers into a corn market that had seen prices drop since May 9.

 

"We had a big shakeup, so you'll get people back in the market," a trader said.

 

A weaker dollar and higher gold prices were also supportive, traders and analysts said, as was the U.S. Department of Agriculture's crop progress report issued Monday showing behind-average planting progress and emergence.

 

However, the market trimmed gains, and July corn could not maintain its rally after breaking above technical resistance at US$6.00.

 

"Over US$6 seems to be a magnet for short-selling," said John Kleist, a broker/analyst for Allendale in McHenry, Ill.

 

Former federal reserve chairman Alan Greenspan's comments Tuesday about a possible "speculative bubble" in commodities may have sparked the retreat, a couple traders said.

 

But a floor analyst said the late retreat was more likely caused by a late break in crude oil.

 

"I think that prompted some selling," he said. "Plus if you look forward, the weather's bearish."

 

Bill Nelson, a grains analyst with Wachovia Securities, said that although the late planting and emergence raises concerns that much of the crop will be pollinating during the late-July heat, recent dry weather has left open the possibility of a large crop this year.

 

He said planting delays have not been as severe as some feared they could be a couple weeks ago.

 

CBOT oats were higher on spillover support from outside markets, a trader said. July oats were up 3 cents to US$3.94 per bushel, September oats were up 3 cents to US$4.05 per bushel and December oats were up 3 cents to US$4.20. The trader said some early buying coincided with corn's rally.

 

Ethanol futures were mixed. June ethanol was up US$0.023 to US$2.481 per gallon and July ethanol was up US$0.006 to US$2.461.