July 31, 2009

 

CBOT Corn Review on Thursday: Higher on support from soy surge

 

 

A soaring soy market dragged Chicago Board of Trade corn futures along with it Thursday, as the nearby September corn contract ended above its 20-day moving average for the first time since June 11.

 

September corn ended up 11 1/2 cents at US$3.32 1/4 a bushel and December corn ended up 14 1/4 cents at US$3.42 1/4.

 

Soys were the story on the trading floor, with most contracts ending up 50 cents or higher. That in itself was enough to prompt a rally in corn, analysts said.

 

Strength in the soymeal market in particular can spill over into corn, said John Kleist, broker/analyst with Allendale.

 

"It's an inexact measurement, but it's certainly a psychological measurement," Kleist said.

 

Crude oil also lent strong support, erasing much of Wednesday's sharp losses. Corn is tied to the energy markets because of ethanol.

 

Corn opened higher and took out its 20-day moving average, which triggered buy stops that further fueled the rally, traders said. Traders said the market is looking stronger technically, adding that it showed signs of resilience on Wednesday, when it ended mixed despite steep losses in crude oil.

 

"The 3.20 area (in December) has held as support, I think the question is how high does it really want to probe on the up move," said Prime Ag Consultants analyst Chad Henderson. "I think you have to say this is more of a bounce in the market than a change in trend."

 

Henderson said he has trouble seeing the market climb much beyond US$3.60.

 

Funds bought an estimated 6,000 contracts, and selling of September and buying of December was noted.

 

The U.S. Department of Agriculture reported strong weekly export sales Thursday, analysts said, which added to the support and served as a reminder that the recent break in prices has stimulated export demand.

 

Limiting the market's upside potential, Kleist said, is farmer selling on the rally, and bearish weather. There are "pockets of problems" with the crop, Kleist said, but mostly the Midwest continues to enjoy moderate temperatures and adequate rainfall.

 

CBOT oats futures ended higher. September oats ended up 2 3/4 cents at US$1.94 a bushel and December oats settled up 4 cents at US$2.08.

 

Ethanol futures were higher. August ethanol was up US$0.011 to US$1.604 a gallon and September ethanol ended up US$0.025 at US$1.571.