June 18, 2009

 

CBOT Corn Review on Wednesday: Ends higher in corrective bounce

 

 

Chicago Board of Trade corn futures ended higher Wednesday in a corrective bounce following recent losses.

 

July corn ended down 3 3/4 cents to US$4.07 3/4 per bushel, September corn ended down 3 1/2 cents to US$4.16 1/4 and December corn ended down 3 1/2 cents to US$4.28 3/4.

 

Traders said there was no fundamental news behind the rally, and that the market was oversold after three days of losses.

 

"I think we beat up the markets a little bit too far, too fast here," said Sid Love, analyst for Kropf & Love Consulting.

 

Although the crop is now planted, there are still enough concerns to keep prices from drifting much further lower, analysts said.

 

"One we don't know what acres are going to be and two we don't know what yields are going to be," Love said.

 

Another analyst said, "I actually think the corn (market) looks ok down here. We've held the long-term trendline."

 

But others think the market has turned downward, and that a top for the year is in place at US$4.50 in the July contract. The market tried and failed multiple times to break through that resistance.

 

Bears say the recent weakness in equities and strength in the dollar has poked a hole in the theory that the U.S. is about to enter a period of significant inflation.

 

"This is certainly not an inflationary environment," a trader said.

 

He said the market was probably getting short-term support Wednesday from expectations that weekly export sales would be strong Thursday. The U.S. Department of Agriculture will report the sales totals at 8:30 a.m. EDT Thursday. Plenty of rain in the forecast during the next few days, along with warming temperatures, are considered bearish.

 

In the longer term, U.S. corn and soy farmers won't encounter major weather problems in the Midwest for most of the remaining growing season, said Drew Lerner, president of World Weather Inc.

 

A "short break" from cool, wet weather in late June will be followed by a return to cooler, wetter conditions for July and possibly August, he said at the FCStonnee/Downes-O'Neill Outlook Conference in Chicago Wednesday.

 

He said there is still the potential for an earlier-than-normal freeze in the lower Midwest, however.

 

CBOT oats futures ended slightly higher. July oats ended up 1 1/4 cents to US$2.14 1/4 per bushel and September oats ended up 2 cents to US$2.37 1/2.

 

Ethanol futures were steady to slightly lower. July ethanol ended down US$0.015 to US$1.724 per gallon and September ethanol ended flat at US$1.710.