November 10, 2009

 

CBOT Corn Review on Monday: Rallies on bullish outside market forces

 

 

Corn futures on the Chicago Board of Trade spiked Monday, rallying on bullish outside market forces and speculative-led buying.

 

December corn ended up 19 cents at US$3.86 per bushel, and March corn ended 19 1/4 cents higher at US$4.00 1/4 per bushel. In pit trades, speculative fund buying was estimated at 9,000 lots.

 

Outside markets with a weaker U.S. dollar served as the spark that brought investment fund money into commodity markets, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.

 

Oversold market conditions following the previous week's declines helped exaggerate the advances, as sellers were reluctant to take on added risk heading into Tuesday's crop reports, he added.

 

Without strong selling interest to offset the fund buying, futures rose, and bullish chart patterns also uncovered speculative buying. Pre-placed buy orders were activated once active contracts pierced resistance at Friday's highs on daily technical charts, said Jack Scoville, analyst with Price Futures Group.

 

Otherwise, futures had little fresh supportive news to justify the gains. Ideal weather conditions for farmers shifted their focus from soy to corn harvesting, applying light fundamental pressure, Scoville said.

 

Private weather firm T-storm Weather said a narrow area of rain will affect eastern Kansas through northern Missouri and into northern/central Illinois Monday night into Tuesday, but most corn acres stay dry. Temperatures will average warmer than usual over the next five days, enhancing drying rates.

 

A moderately strong storm system is forecast to slide across the central U.S. by the weekend or early next week. "Our forecast is for light rain with a short-term slowing of drying and harvesting next weekend, but we are forecasting only a low chance for substantial rain that would induce a more notable slowing," T-storm Weather said.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EST, with harvest progress expected to be in a range of 30% to 43%, up from the prior week's 25%.

 

USDA is scheduled to issue supply and demand estimates and updated crop projections Tuesday at 8:30 a.m. EST. Analysts on average project the corn crop at 12.995 billion bushels, which would be down slightly from the USDA's October estimate of 13.018 billion. The 24 analysts' estimates ranged from 12.674 billion to 13.400 billion bushels. The average yield estimate was 163.7 bushels per acre, down from the October USDA estimate of 164.2 bushels per acre but still well above the 2008 yield of 153.9 bushels.

 

CBOT oat futures finished stronger with the rest of the grain floor. December oats rose 4 1/2 cents to US$2.58 1/2 per bushel, and March oats closed up 4 1/ 2 cents at US$2.72.

 

Ethanol futures settled firmer. December ethanol was 6.3 cents higher at US$1.915 per gallon, and January ethanol was 3.5 cents higher at US$1.856.