July 14, 2009

 

CBOT Corn Review on Monday: Higher; strong basis, selling exhausted

 

 

Strong cash prices and the exhaustion of recent selling sent Chicago Board of Trade corn futures higher Monday, analysts said.

 

July corn, which expires Tuesday, ended up 13 1/2 cents to US$3.59 per bushel. September corn ended up 3 1/2 cents to US$3.31 3/4 and December corn ended up 1 1/2 cents to US$3.39 1/2.

 

Cash prices have been strong as farmers hold on to their supplies, analysts said. John Kleist, broker/analyst with Allendale, said the recent drop in futures have prompted farmers to halt selling. He added that export sales have been solid the past couple of weeks, supporting basis.

 

The strength in July could signal support for back months, analysts said.

 

"It's an indication that perhaps that if there was sound fundamental logic behind it, September may move from where it is to where July goes off the board," Kleist said.

 

Jason Britt, president of Central State Commodities, added: "The old-timers used to say, when the front-month goes off, it tends to be a magnet up or down."

 

Traders and analysts said that the market is also oversold after the recent losses.

 

"There's a little hesitancy to lay on this thing a whole lot harder," Britt said.

 

But weather remains bearish, as moderate temperatures at the approach of the crop's key pollination period have some traders talking about the potential for record yields this year. Crop conditions are considered good, and the trade expects little change in Monday's crop progress report from the U.S. Department of Agriculture. Estimates range from a decrease of 1 percentage point in the portion of the crop rated good-to-excellent to an increase of 1 percentage point.

 

Kleist noted that it's only July 13. While he usually isn't receptive to bullish arguments about the potential for an early first freeze, "it's a little bit early to say there won't be," he said.

 

CBOT oats futures ended higher. September oats ended up 7 cents to US$2.19 per bushel and December oats settled up 7 cents to US$2.31.

 

Ethanol futures ended slightly lower. September ethanol ended down US$0.003 to US$1.460 per gallon and December ethanol ended down US$0.005 to US$1.450.