November 5, 2008
CBOT Corn Review on Tuesday: Higher but profit-taking pares gains
Profit-taking led Chicago Board of Trade corn futures to close off their highs, though prices still ended with a 2.5% gain on the day amid what many termed an Election Day rally.
December corn rose 10 cents to settle at US$4.13 a bushel, near the US$4.12 pit session low.
Much of the price strength was due to a sharp rally in crude oil, which saw gains of as much as 10%, a weak dollar and higher precious metals prices. Wall Street also saw gains of 2%-2.5% when the corn market closed amid an Election Day rally, inspired in part by ideas a new administration, either Republican or Democrat, will signal a fresh economic start.
The polls continue to favor Sen. Barack Obama, and his agricultural policies, while true or not, are thought to be friendly for corn prices, an analyst said.
"The perception is that (Sen. John) McCain wanted to eliminate subsidies and Obama is apparently corn friendly...and of course if the Democrats would control Congress that means handouts, subsidies and ethanol will be just fine," said John Kleist, broker/analyst at Allendale Inc.
Corn also received support from a behind-schedule harvesting pace and adverse weather expected to set in by Wednesday and Thursday. Farmers have taken advantage of Indian Summer-like conditions to get the crops in the bin, but many have left corn in the field to dry in hopes of avoiding high drying costs at the elevator, a trader said.
The corn harvest was 55% complete as of Sunday, up from 39% the previous week but down from the 79% five-year average, the U.S. Agriculture Department reported.
Top grower Iowa's harvest was just 43% complete as of Sunday, compared to its 79% average. The Illinois harvest was pegged at 66% finished, down from its average of 92 percent.
The warm, dry weather that has enveloped the Midwest the last several days will be coming to an end on Wednesday and Thursday, as wetter and cooler conditions will likely continue for the next six to 10 days, private forecaster DTN Meteorlogix said. Showers are forecast on Wednesday, with snow or rain showers possible on Thursday.
Temperatures will begin to fall to near to below normal in the west on Thursday and by Saturday and Sunday, below-normal readings will cover the entire Midwest, Meteorlogix said.
Early in the session, December corn hit a three-week high of US$4.21 1/2 on speculative fund buying in a market that saw little early selling.
Before the close, funds were buyers of 4,000 corn contracts, a floor broker said.
Technically, December corn meets nearby resistance in the US$4.20-US$4.23 1/2 area, according to Kleist. The gap that runs up to US$4.30 1/2 provides another layer of resistance.
Support is uncovered at the session low of US$4.12, US$4, then at Monday's US$3.98 low.
Ethanol futures closed higher. November ethanol rose 5.4 cents to US$1.843 per gallon, and December ethanol jumped 8.2 cents to US$1.821.
December oats were up 9 cents at US$2.45 per bushel, and March oats climbed 8 3/4 cents to US$2.62 1/2.