September 9, 2009

 

CBOT Corn Review on Tuesday: Ends higher on outside market strength

 

 

Chicago Board of Trade corn futures ended higher Tuesday as the market joined in a widespread rally fueled by a weaker dollar, analysts said.

 

September corn ended up 2 1/4 cents to US$3.02 3/4 per bushel, December corn ended up 1 1/4 cents to US$3.07 1/2 and March corn ended up 1 1/4 cents to US$3.21.

 

The sharp drop in the dollar and climb in crude oil has conjured up memories of last year's rally across the commodities sector, said Don Roose, president of U.S. Commodities in Des Moines.

 

"I think it's fear that we could ignite a little bit on the demand side as we move lower," Roose said of the day's strength.

 

Traders noted the December contract held at its contract low overnight at US$3.02 as the outside support and modest short-covering helped it rebound. Strength in soy was also supportive. Funds bought an estimated 3,000 contracts Tuesday.

 

But the market has little of its own supportive fundamental news, traders said. There is no sign of frost in the 15-day forecast, analysts said, although cooler weather during that period could keep crop development slow. Roose noted that mid-day weather models were colder.

 

The market has been pressured in recent sessions by the idea that "big crops get bigger," and the lack of a frost threat has many in the trade eyeing a record yield and a final crop exceeding 13 billion bushels.

 

Analysts, on average, expect the U.S. Department of Agriculture to project the corn crop at 12.932 billion bushels, with a yield of 161.5 bushels per acre, in Friday's crop production report, according to a Dow Jones Newswires survey of 22 analysts.

 

Traders said the market could be underpinned by modest short-covering heading into Friday's report. The USDA will release the crop production report as well as new supply and demand tables Friday at 8:30 a.m. EDT.

 

Despite Tuesday's gains, "corn-market bulls have to be disappointed that bullish 'outside markets' that include sharply higher crude-oil prices, a sharply lower U.S. dollar and higher stock index futures prices haven't been able to better support corn futures," technical analyst Jim Wyckoff said.

 

In other news, European Union ministers will soon vote on allowing the import of a new genetically modified corn variety after several U.S. soy cargoes with traces of the grain were blocked in the summer, an E.U. official said Tuesday.