August 8, 2008

 

CBOT Corn Review on Thursday: Ends higher on technical bounce, end-users

 

 

Chicago Board of Trade corn futures bounced Friday on end-user pricing, strong export sales and technical buying, traders said.

 

September corn ended up 14 1/4 cents to US$5.22 1/4 per bushel, December corn ended up 14 1/4 cents to US$5.42 and March corn ended up 14 1/2 cents to US$5.61 3/4.

 

A prevailing sentiment that the market was oversold after the December contract plunged almost a dollar in five days supported the rally, traders said. The market has bounced since hitting an intraday low Wednesday of US$5.03 for September.

 

"I think US$5 is pretty major support," said Joel Karlin, analyst for Western Milling. He added that "US$4 is where this whole thing started off," referring to corn's rally during the past year. It would likely take an outstanding crop to approach that level, he said.

 

The trade is awaiting Tuesday's report from the U.S. Department of Agriculture on crop production, and the market will likely be quiet as traders consolidate ahead of the report, traders said.

 

The Environmental Protection Agency's decision to reject a request by Texas for a waiver of the federal renewable-fuels mandate was seen as having little effect on the market.

 

News of the rejection had leaked out beforehand, and it was already priced into the market, analysts said. Rejection of the request may have prevented another plummet, analysts said.

 

"I wouldn't say it didn't provide any support, but it was minimal," said Vic Lespinasse, analyst with grainanalyst.com. "If the EPA had approved it, it would have been a shock."

 

Lower corn prices have drained the "passion" from ethanol critics, analysts said. But they added that corn use for ethanol will remain a contentious issue.

 

"I do think they will revisit the issue, but I don't think anything will come out of it, particularly as long as we have adequate corn supplies," Karlin said.

 

Strong export sales supported the market, analysts said. The U.S. Department of Agriculture reported net export sales of 1,056,300 metric tonnes for the week ended July 31, exceeding analysts' expectations of between 500,000 and 900,000 metric tonnes.

 

Corn's recent drop has lured end-users, who also supported the market Thursday, Karlin added.

 

CBOT oats ended higher. September oats were up 3 cents to US$3.60 per bushel, December oats were up 3 1/4 cents to US$3.79 1/4 and March oats were up 3 1/4 cents to US$3.98 1/2. A trader said there was light selling at the close. He added that oats did not follow corn significantly higher Thursday because oats hadn't followed corn lower during its recent break.

 

Ethanol futures were higher. September ethanol was up US$0.069 to US$2.228 per gallon and December ethanol was up US$0.052 to US$2.18 1/4.