June 10, 2009

 

CBOT Corn Review on Tuesday: Higher on dollar as trade awaits report

 

 

Chicago Board of Trade corn futures ended higher Tuesday on a weaker dollar and short-covering ahead of Wednesday's supply-and-demand report, traders said.

 

July corn ended up 9 cents at US$4.44 per bushel, September corn ended up 8 1/2 cents at US$4.53 1/4, and December corn ended up 8 1/4 at US$4.66 1/4.

 

As has been the case in recent weeks, movement in the dollar helped set corn's direction Tuesday, as weakness in the greenback sent corn prices higher. Crude oil was also higher, adding to the bullish sentiment. Corn was also seen as oversold heading into the session following losses Friday and Monday.

 

There was short-covering across the grains and oilseeds complex Tuesday, analysts said, as wheat and soybeans both climbed. Joe Victor, vice president/marketing for Allendale, said that "as the beans move higher, they're able to take the corn with them."

 

The trade is awaiting Wednesday's supply and demand report, which will be released at 8:30 a.m. EDT. Most traders aren't expecting big news out of the report.

 

Analysts on average are expecting the U.S. Department of Agriculture to leave 2008-09 ending stocks virtually unchanged, and to cut 2009-10 ending stocks to 1.071 billion bushels, from 1.145 billion.

 

The focus will be on the new crop estimates, analysts said, with some expectations that a struggling crop could send 2009-10 carryout below 1 billion bushels.

 

Morgan Stanley analyst Hussein Allidina said in a research note that the USDA could lower its crop yield estimate by 2-to-4 bushels per acre from the May estimate of 155.4 bushels per acre.

 

Analysts aren't expecting Wednesday's report to make any changes to planted acreage, but many say that the June 30 acreage report will likely show a cut.

 

"We're not going get all the acres planted," Victor said. "You could possibly see a shift of as much as 1.5 million acres coming out of corn, potentially going into soybeans only makes the stocks that much thinner."

 

Others say that while the market has near-term technical momentum, the fundamentals are not bullish.

 

"On the corn balance sheet, there's no worries right now," a floor trader said, noting that domestic demand is "sloppy."

 

Funds bought an estimated 7,000 contracts Tuesday.

 

In other markets, CBOT oats futures ended higher. July oats climbed 3 cents to US$2.46 per bushel and December oats ended up 3 cents at US$2.69.

 

Ethanol futures were higher. July ethanol ended up US$0.031 at US$1.773 per gallon, and September ethanol settled up US$0.025 at US$1.780.