August 13, 2009

 

CBOT Corn Review on Wednesday: Higher amid short-covering, outside markets

 

 

Chicago Board of Trade corn futures ended higher Wednesday amid short-covering and outside market support.

 

September corn ended up 4 1/4 cents at US$3.30 3/4 per bushel, and December corn was up 5 1/4 cents at US$3.36 1/4.

 

The market opened lower, but its inability to extend losses on U.S. Department of Agriculture reports that were mostly considered bearish prompted traders to cover short positions, analysts said.

 

Corn also found support from a weaker dollar, higher crude oil and gains in equities, analysts said.

 

Views of Wednesday's USDA reports ranged from neutral to bearish, but there were widespread views that the market will drift to new lows.

 

Although the USDA increased the new crop carryout, some dismissed that number, saying it was based on a rosy demand outlook that included an increase in feed demand.

 

"I don't know how much scope the USDA has to increase demand further," said Joel Karlin, analyst for Western Milling.

 

The trade also saw the USDA's yield of 159.5 bushels per acre as surprisingly high. Traders generally expect that the yield will continue to climb.

 

"I thought the report was bearish, and I think it's going to get more bearish," Karlin said.

 

John Kleist, broker/analyst with Allendale, said talk of frost in northern Minnesota and North Dakota next week helped the market rebound from Wednesday's early losses.

 

Kleist said the support is only psychological, but "we're so touchy-feely anymore when it comes to the damn weather."

 

A couple analysts said corn's strength might have been partly due to the historically high soy-to-corn price ratio, which is above 3-to-1. Soys were weaker for most of the day despite what traders saw as a bullish USDA report.

 

A trader also noted buying of corn and selling of wheat during the session.

 

CBOT oats futures ended higher. September oats ended up 2 cents at US$2.01 per bushel, and December oats settled up 2 cents at US$2.14 1/2. The USDA on Wednesday increased its production estimate, but lowered imports and usage, resulting in a decline in projected new crop ending stocks to 73 million bushels, down from 77 million.

 

Ethanol futures ended higher. September ethanol ended up US$0.015 at US$1.550 per gallon, and November ethanol settled up US$0.012 at US$1.522.