June 12, 2009

 

CBOT Corn Review on Thursday: Higher on soys, weaker dollar

 

 

Chicago Board of Trade corn futures ended higher Thursday as the market followed soys and got support from outside markets, analysts said.

 

July corn was up 5 1/4 cents at US$4.41 a bushel and December corn was up 5 1/4 cents at US$4.63 1/4.

 

Corn took almost all of its strength from the soy market, analysts said. A weaker dollar and higher crude oil also boosted prices.

 

Corn had little of its own news, traders and analysts said. John Kleist, broker/analyst for Allendale, said that as the soy market climbed, the corn had "a void of selling.

 

The gains followed losses on Wednesday, as the market continues on a sideways path. Traders and analysts say that US$4.50 is posing formidable resistance in the July contract. One trader said that the bottom end of the range is around US$4.30.

 

Analysts say concerns about the crop will continue to provide underlying support, but some point to warmer weather in the forecast for next week as bearish.

 

Soys have surged on old crop supply concerns. Analysts said once the market loses steam, there could be a "day of reckoning" for corn, which some say doesn't enjoy strong fundamentals. The outlook for ethanol demand and especially for feed demand isn't very good, they said.

 

"While the corn traders continue to push this market higher, maybe once in a while they ought to glance at a cattle chart, maybe a hog chart, maybe a milk chart," Karlin said.

 

There is little conviction about which way the market will go, heading into the U.S. Department of Agriculture's crucial June 30 acreage report. Traders said prices will depend on the dollar and on any weather events.

 

Karlin pointed to warmer weather forecast for next week, saying that it could help the crop, which enjoys good moisture, to shoot higher.

 

"How do you spell 'greenhouse?'" Karlin said.

 

But some traders and analysts say the worries about the crop will continue to underpin, as will some expectations that new crop carryout could drop below 1 billion bushels.

 

Although corn has in recent days traded in a sideways pattern, the trend remains higher, as the July contract has held above its 20-day moving average since April 29.

 

CBOT oats futures ended higher. July oats ended up 3 cents at US$2.44 1/2 a bushel and December oats ended up 2 1/2 cents at US$2.67 1/2.

 

Ethanol futures were higher. July ethanol ended up US$0.019 at US$1.785 a gallon and September ethanol ended up US$0.025 at US$1.795.