July 2, 2009

 

CBOT Corn Review on Wednesday: Posts gains on consolidating bounce

 

 

Chicago Board of Trade corn futures closed modestly higher Wednesday amid consolidation of an overbought corn market and support from other markets.

 

July closed up 4 cents at US$3.51 3/4 a bushel, and December closed up 2 cents at US$3.69 1/4.

 

The market opened higher, boosted mostly by a strong soy performance, but couldn't hold onto that support alone. Bearish factors proved too heavy and hung on corn futures, pushing prices modestly lower. The market traded both sides throughout the day before closing higher.

 

Corn was trapped "between a rock and a hard place," said John Kleist, broker/analyst at Allendale. Analysts and traders said the market was oversold Tuesday after a fall to limit down, so a bounce was expected. The market couldn't entirely shrug off the bearish picture surrounding it, including higher-than-expected acreage and grain stocks, good crop-condition ratings and favorable crop-weather conditions.

 

Still, there was little follow-through selling after Tuesday's bearish U.S. Department of Agriculture acreage report, which shocked the market, said Vic Lespinasse, a floor analyst with Grainanalyst.com. Soy strength underpinned prices, and the soy rally was the main reason corn didn't continue a fall of another 15 cents, analysts said.

 

A weaker U.S. dollar and stronger equities also lent support to corn, traders and analysts said, which helped to limit losses.

 

But further gains were capped by a variety of bearish factors. The USDA increased planted-corn acres significantly, more than the average analyst estimate and more than the highest analyst estimate. Still, Sterling Smith, a market analyst with Country Hedging, said the market was trying to get over the acreage report.

 

"We've fulfilled most of the initial shock of the report," Smith said.

 

Grain stocks were higher than expected, and the USDA said corn-crop conditions were 72% good-to-excellent. The bearish factors gave corn prices a "reality check," a floor trader said.

 

Traders and analysts now are turning to weather outlooks. Favorable crop conditions have persisted recently, with cooler temperatures and light showers across the corn belt. However, July is an important month for corn, as it is typically when the plant pollinates.

 

"The crop is not made yet," said Sid Love, analyst with Kropf & Love. He said late planting in the eastern corn belt because of wet spring weather could cause some issues in corn prices later on.

 

Weather in the Midwest looks favorable over the upcoming week, with moderate to cooler temperatures and occasional showers, DTN Meteorlogix said.

 

CBOT oats ended higher. July oats ended up 10 3/4 cents at US$2.25 1/2 per bushel, and September ended up 10 cents at US$2.35.

 

Ethanol futures ended mostly higher. July ethanol closed up US$0.020 at US$1.655 per gallon, and December was unchanged at US$1.550.