June 24, 2009

 

CBOT Corn Review on Tuesday: Up in 'tepid' short-covering bounce

 

 

Chicago Board of Trade corn futures finished slightly higher Tuesday on short-covering, while the upside move was limited due to a decent-looking crop and harmless weather, analysts said.

 

July corn was up 3 3/4 cents at US$3.89 a bushel, September corn was up 3 3/4 cents at US$3.97 1/4 and December corn ended up 3 1/2 cents at US$4.09.

 

Traders and analysts said the modest climb was nothing for bulls to be excited about considering the market's drop of roughly 70 cents during the past two weeks.

 

"It's more of a short-covering bounce," said Chad Henderson, an analyst with Prime Ag Consultants. "For those that are really bullish in the market, today's trade is really disappointing. You have crude up a US$1, the dollar is sharply lower, and you can't get anything more than a two-cent bounce in corn."

 

The market was a bit oversold after falling the past few weeks and opening lower Tuesday morning, as favorable crop weather and a bearish technical pattern hung heavy on the market. Short-covering and a correction of Monday's slide pushed prices upward, but not by much, in a "tepid recovery," said Joel Karlin, an analyst at Western Milling. Prices did close near session highs Tuesday.

 

Although the crop was late getting in the ground in much of the U.S. corn belt, the recent favorable weather has been demonstrated in the corn condition ratings.

 

"With the crop ratings right now 70% good-to-excellent, it probably should be argued that we have trend-line yields, not a couple bushels below trend (as the USDA has projected)," Henderson said.

 

Karlin said forecast above-normal temperatures should help crop development. Very warm to hot weather is expected through most of the U.S. through Saturday, though heat will be mitigated at times across central and northern corn areas due to thunderstorms, according to a T-storm Weather forecast.

 

A cool front across the corn belt this weekend will push heat further south and west, but a bubble of heat could either help or hinder crops depending on where it centers itself, T-storm Weather meteorologist Mike Tannura said in an afternoon report.

 

The market is looking ahead to the June 30 USDA Acreage Report. The trade is expecting a slight reduction in corn acres, said Joe Victor, vice president/marketing for Allendale. He said the market should see fairly decent volume before the report is released.

 

CBOT oats futures ended higher. July oats ended up 4 1/2 cents at US$2.08 a bushel and December oats ended up 4 1/2 cents at US$2.31.

 

Ethanol futures were mixed. July ethanol was up US$0.007 at US$1.687 a gallon and September ethanol settled down US$0.001 at US$1.655.