August 4, 2009

 

CBOT Corn Review on Monday: Up sharply on technical strength, dollar

 

 

Bullish technical momentum and surging outside markets swept up Chicago Board of Trade corn futures Monday, analysts said.

 

September corn ended up 18 1/2 cents to US$3.58 per bushel and December corn ended up 19 1/2 cents to US$3.69.

 

The market gapped higher on the open and continued to surge throughout the day. Funds poured money into the market, buying an estimated 15,000 contracts. The biggest factor in the day was a slumping dollar, said Jerry Gidel, analyst with North America Risk Management Services.

 

Corn was supported by sharp gains in soys, crude oil, wheat and other markets.

 

"The bus came through and hit everybody on every curve," Gidel said.

 

Adding to the bullish sentiment, analysts said, was concern about the threat of more intense heat expected in the U.S. corn belt. Although some in the trade were talking up the threat, many analysts said there wasn't much to be worried about. While this summer's cool weather has widely been seen as supportive, it has led to slow crop development, which could be solved by a short heat wave, some analysts said.

 

Rich Feltes, senior vice president and director of research for MF Global, said that, as a former crop scout, "I can tell you there's nothing the crop needs more than heat units right now to push it along." He added that areas of the corn belt that have already pollinated are reporting fantastic ear counts and ear lengths.

 

"My opinion is we're rapidly closing the window on hurting this corn crop," Feltes said.

 

He said Monday's climb has more to do with investors' appetite for risk than it did the weather.

 

The market hit buy stops on its early surge, accelerating the rally, analysts said. The corn market did trim 6 cents to 7 cents from its highs late in the day, however.

 

The trade is expecting a slight drop of one to two percentage points in the portion of the crop rated good-to-excellent in Monday afternoon's crop progress report. The U.S. Department of Agriculture will release the report at 4 p.m. EDT.

 

CBOT oats futures ended sharply higher. September oats ended up 13 cents to US$2.11 per bushel and December oats ended up 13 1/4 cents to US$2.25 1/4. An analyst said the market is poised to break out from oversold conditions.

 

"The fundamentals for oats remain very bullish as lower planted acreage, a very late developing crop, poor Canadian crop conditions and rising demand all conspire to reduce current ending stocks by near 40% come 2010," Shawn Hackett, president of Hackett Financial Advisors, said in a report.

 

Ethanol futures ended higher. August ethanol was up US$0.045 to US$1.670 per gallon and September ethanol was up US$0.068 to US$1.651.