CBOT Corn Review on Monday: Higher on soy rally; past 10-day average

 

 

Bullish soys boosted CBOT corn futures Monday, as the most-active December contract ended above its 10-day moving average for the first time since Aug. 5.

 

September corn ended up 7 3/4 cents to US$3.29 1/2 per bushel and December corn ended up 9 1/4 cents to US$3.35 1/4.

 

Analysts said there was little to justify corn's gains other than soys, which surged on strong demand, technical strength and concerns about an early frost.

 

"The market's more concerned about an early frost in beans than they are in corn," said John Kleist, broker/analyst for Allendale.

 

The weather is mostly considered benign for corn, although analysts note that the corn crop would also be vulnerable to yield losses if the season's first frost arrives early.

 

Funds bought an estimated 6,000 contracts as prices ended at or near session highs.

 

A trader said that seasonal trends are pointing higher, and that traders who are buying corn Monday and selling it in mid-September would make money 87% of the time.

 

Recent gains in crude oil, including a modest climb Monday, are also supportive to corn because of its tie to energy through ethanol, traders say.

 

But expectations that "a big crop gets bigger" are weighing on the market, traders and analysts said, as market bears talk up the potential for a "huge" crop.

 

Unlike soys, demand for corn is seen as shaky at best. Most analysts don't believe the U.S. Department of Agriculture's increased projection for feed demand in the 2009-10 marketing year issued earlier this month. Kleist added that demand could remain weak if the economy doesn't rebound.

 

Analysts say the Commodity Futures Trading Commission's recent stance on speculators could continue to weigh on the market. Kleist noted that index funds, which are traditionally overwhelmingly long, shed long positions in the latest supplemental commitment of traders report.

 

CBOT oats futures ended higher. September oats ended up 6 3/4 cents to US$2.11 3/4 per bushel and December oats ended up 6 3/4 cents to US$2.25 3/4.

 

Ethanol futures were higher. September ethanol ended up US$0.029 to US$1.640 per gallon and December ethanol ended up US$0.033 to US$1.610.