September 10, 2009

 

CBOT Corn Review on Wednesday: Higher on dollar weakness, short-covering

 

 

A weaker dollar and short-covering ahead of Friday's government reports fueled modest gains for Chicago Board of Trade corn, analysts said.

 

September corn ended up 2 3/4 cents to US$3.05 1/2 per bushel, December corn ended up 2 1/4 cents to US$3.09 3/4, and March corn settled up 2 1/4 to US$3.23 1/4.

 

Continued weakness in the dollar set the tonnee, and corn also had support from gains in crude oil, analysts said.

 

Terry Reilly, analyst for Citigroup, added that traders were buying corn and selling wheat and soy. Reilly noted that the corn market has been unable to break through support at the US$3 level.

 

"I think it's a good buy," Reilly said. "The prices look attractive to commercials."

 

The trade is awaiting Friday's crop production report from the U.S. Department of Agriculture, and while the trade is widely expecting a record U.S. yield above 160.4 bushels per acre, some traders were noting Wednesday an estimate by private firm Lanworth of a yield below 154 bushels per acre.

 

The estimate caused some traders to take a step back and say "what am I missing here?" said Dale Durchholz, analyst with AgriVisor.

 

Lanworth relies on satellite data, and analysts said they have a strong recent track record in their forecasts.

 

Traders said there's little fundamental strength to the market at the moment and that short-covering has been prompted by the break in the dollar.

 

"Everyone who wanted to cover before the report is being forced to do it now," a floor trader said.

 

The crop outlook remains bearish, analysts said. Expectations of a large output are increasing because of benign weather forecasts that do not include a frost.

 

Traders expect positioning ahead of Friday's USDA report to be a key feature of Thursday's trade.

 

CBOT oats futures ended lower. September oats settled down 1 1/2 cents to US$1.91 1/2 per bushel and December oats ended down 1 1/2 cents to US$2.03 1/2.

 

Ethanol futures were slightly higher. October ethanol ended up US$0.006 to US$1.575 per gallon and November ethanol settled up US$0.015 to US$1.560.