October 28, 2010

US corn futures rebound on spillover wheat support

US corn futures ended higher Wednesday (Oct 27), rebounding from an early session setback on spillover support from wheat.

CBOT December corn ended 6 1/4 cents, or 1.1%, higher at US$5.77 1/4 a bushel. Speculative fund buying was estimated at 9,000 lots.

The market made an impressive recovery from early profit-taking weakness, managing to bounce despite pressure from outside markets, including gold, crude oil, and a limit down slide in cotton futures, analysts said.

Despite the gains, corn futures continued to trade within a two-week trading range, unable to gather momentum as traders await the government's November crop reports.

Market participants are waiting for the US to update its corn harvest forecasts next month after futures rallied to two-year highs following a deep cut earlier this month. The cut was larger than expected and reflected damage to the crop from weather that was too wet in June and too hot and dry in July and August.

The uncertainty of the USDA's production and supply/demand reports enticed traders into keeping risk premium in the market, with questions surrounding China's desire to rebuild food reserves supporting prices also.

Futures initially dipped lower on follow-through selling from overnight trading, with a firmer US dollar a key factor attracting sellers. Strength in the US dollar applies broad pressure to commodities and encourages the perception that US grains look more expensive to foreign buyers.

Futures were under pressure until wheat's rise to a new high for the week attracted speculative buying. However, lackluster export demand since prices rallied to two-year highs previously remains a bearish feature limiting upside price movement, Henderson added.

On tap for Thursday (Oct 28), USDA is scheduled to release its weekly export sales report for the week ended October 21, with sales projected at an unimpressive 300,000-500,000 tonnes, according to analysts.