June 3, 2009

 

CBOT Corn Review on Tuesday: Ends higher; late surge of fund buying

 

 

Chicago Board of Trade corn futures ended higher Tuesday, surging late amid fund-buying and firm crude oil, analysts said.

 

July corn ended up 3 3/4 cents to US$4.49 1/2 per bushel, and December corn ended up 3 1/2 cents to US$4.73 3/4.

 

Corn shook off early losses that enveloped a variety of markets as traders took profits after Monday's rally, traders said.

 

"We saw crude oil near the end of grain trading try to turn higher, so corn started to firm up," said Brian Hoops, president of Midwest Market Solutions.

 

Some traders saw wet U.S. corn-belt weather as supportive, although Hoops noted that the good-to-excellent rating in Monday's U.S. Department of Agriculture report was higher than last year, which could prove to be bearish later on.

 

Funds, which were net sellers at midday, ended the session having bought an estimated 3,000 contracts.

 

The market also had technical strength, a trader said, noting that the July contract has moved and held above its 200-day moving average.

 

Although the market opened lower, corn's downside move was more subdued than the slump in soybeans and wheat, just as its rally Monday was more subdued.

 

"Wheat is the weakest link, soybeans I think have a little fluff, and corn just has a good solid up-trend," the trader said.

 

Many traders and analysts expect that U.S. corn acreage will be at least 1 million acres less than the USDA projected in March due to a soggy spring that had delayed planting in Illinois and Indiana. That is fueling ideas that 2009-10 carryout could fall below 1 billion bushels.

 

But some analysts say that the USDA underestimated planted acreage this year in the first place. Others say that while production will fall, so will demand, particularly for feed, due to the recent rally.

 

CBOT oats futures continued to surge Tuesday. July oats ended at a session high of US$2.60 1/2 per bushel, 1/2 cent off its 200-day moving average. December oats ended up 7 cents at US$2.81.

 

Ethanol futures were higher. June ethanol was up US$0.010 at US$1.780 per gallon, and July ethanol was up US$0.015 at US$1.784.