June 2, 2009

 

CBOT Corn Review on Monday: Climbs on wheat, soy, dollar

 

 

Fund-buying pushed Chicago Board of Trade corn futures higher Monday as the market was swept up in a widespread surge in commodities.

 

July corn ended up 9 1/2 cents at US$4.45 3/4 per bushel, and December corn ended up 10 cents at US$4.69 1/4. The market ended at or near session highs.

 

Corn gapped higher on the open and held gains throughout the day on support from a weaker dollar, higher crude oil and surging equities.

 

Fund activity was the story of the day, as speculative funds continued to buy on the strategy of "if it works, you just keep putting it on," said Dave Marshall, independent commodity broker and adviser in southern Illinois.

 

Wet U.S. corn belt weather and delayed plantings were considered supportive, although some said that was merely an excuse for a market that was bound to climb as investors flock to commodities. Funds bought an estimated 8,000 contracts as the market surged into the close, ending at new highs.

 

Analysts say the environment in some ways feels similar to last year's historic climb.

 

"The money flow is similar. But I think the scenario is different," a trader said. He said that consumer demand is not nearly as strong as it was last year, and that bulls are "getting ahead of themselves."

 

Wheat and soybeans were sharply higher, and corn's climb, by comparison, was limited due to questionable demand, analysts said. Livestock and hog producers in particular can't afford higher corn prices, analysts said.

 

"The problem with a higher move in corn prices is that there are very few needs for high priced corn," Linn Group analyst Jim Riley said in a market commentary.

 

The trade continues to worry about the crop, which is well behind schedule in the eastern U.S. corn belt. More rains at the start of the week posed further problems for those who haven't planted, although traders note the rain is good for corn that is already in the ground.

 

Traders expect Monday afternoon's crop progress report from the U.S. Department of Agriculture to show plantings 90%-95% complete.

 

Technically the market is strong, as it made new highs for the second day in a row. July corn is at its highest price since Jan. 6.

 

CBOT oats futures ended higher. July oats ended up 3 cents at US$2.54 per bushel, and December oats ended up 3 1/4 cents at US$2.74.

 

Ethanol futures were higher. June ethanol settled up US$0.040 at US$1.770 per gallon and July ethanol ended up US$0.023 at US$1.769.