July 18, 2009

 

CBOT Corn Review on Friday: Higher on short-covering, crude gains

 

 

Chicago Board of Trade corn futures ended higher Friday on support from crude oil and short-covering, analysts said.

 

September corn ended up 5 1/2 cents to US$3.22 1/4 per bushel. December corn ended up 6 1/4 cents to US$3.31 1/2.

 

Although there's little fundamental support for the market, the downside momentum has slowed after recent losses, some analysts said.

 

"I'm moving to the point where I'm wondering if we're low enough," said Chad Henderson, analyst with Prime Ag Consultants. "I don't think we're going to US$4 on corn, but I think the downside momentum has definitely slowed."

 

Traders covered their short positions ahead of the weekend, some traders said. Funds bought an estimated 6,000 contracts.

 

Gains in crude oil also supported the market, traders said. In early trade Friday, September corn found support at US$3.16 1/2 per bushel, the contract low that was set Thursday. Still, the contract lost six cents on the week.

 

Cash prices have provided underpinning support for the market, some analysts said, as farmers have been reluctant to sell given the sharp recent drop in prices.

 

Bulls think the market could head toward US$3.50 in the December contract, although they aren't expecting a big rally. They say it is too early in the season to assume that the corn crop is going to get through the entire season without weather problems.

 

Bears say the market could test US$3 in the nearby contract. They note that weather has remained ideal, and some are talking about the potential for record yields this year. The record is 160.4 bushels per acre, and the USDA projected only 153.4 bushels per acre in its latest supply and demand report.

 

In addition to forecasts for the next couple of weeks, one-month and three-month forecasts also point to benign weather, analysts said Friday.

 

Analysts said the weather might be a little too chilly, but is still much more preferable to excessively hot weather.

 

CBOT oats futures ended slightly higher. September oats ended up 3/4 cent to US$2.15 1/4 per bushel and December oats ended up 1 1/4 cents to US$2.27 1/4.

 

Ethanol futures were higher. September ethanol ended up US$0.024 to US$1.534 per gallon, and December ethanol ended up US$0.030 to US$1.150.