August 1, 2009

 

CBOT Corn Review on Friday: Up on crude, short-covering; weekly gain

 

 

Chicago Board of Trade corn futures finished the day and the week strong, ending higher Friday on short-covering and support from crude oil, traders said.

 

September corn ended up 7 1/4 cents at US$3.39 1/2 a bushel, and December corn ended up 7 1/4 cents at US$3.49 1/2.

 

The rally was primarily driven by short-covering, analysts said, although some have noted an improvement in trade sentiment. The September contract gained 23 1/4 cents on the week, ending a string of seven consecutive weekly losses.

 

A trader and an analyst said there was little fundamental reason for the climb, and noted that seasonally the market usually moves higher this time of year, at least until the August crop report, which will be released Aug. 12. Month-end positioning was also noted.

 

"We're also seeing a short-covering rally here," said Joel Karlin, an analyst for Western Milling. "I'm not going to read a whole lot into it."

 

Corn was weaker in early trade, but outside markets soon prevailed, as crude oil surged and the dollar slipped.

 

Mike Zuzolo, president of Global Commodity Analytics & Consulting, said that cash prices have "woken up" the past few days. The strength in cash, strong export demand and the possibility of heat creeping into the Western corn belt in the long-range forecast has helped shift market sentiment, he said.

 

"I think that brought the psychology back near closer to center, where the corn was not an obvious sell like it has been," he said.

 

But some traders discount any potential weather threat, and say the ongoing cool weather is good for the crop.

 

Mark Gold, managing partner for Top Third Ag Marketing, said in a market commentary that there are divergent views on upcoming weather.

 

"It looks like this weekend will be the first all summer when the weather could cause the grains to move dramatically on Sunday night," Gold said. "The question is which way?"

 

Analysts on Friday also noted that the government reported increased ethanol production in May, which could make up for continued weak feed demand.

 

Analysts see resistance for December corn at US$3.50.

 

Funds bought an estimated 6,000 contracts.

 

CBOT oats futures ended higher. September oats climbed 4 cents to US$1.98 a bushel and December oats ended up 4 cents at US$2.12.

 

Ethanol futures were higher. August ethanol ended up US$0.021 at US$1.625 a gallon and September ethanol climbed US$0.012 to US$1.583.