November 17, 2009

 

CBOT Corn Review on Monday: Ends above US$4 on dollar slump, weather

 

 

A stumbling U.S. dollar helped push Chicago Board of Trade corn futures to a rare close above US$4 on Monday.

 

December corn ended up 11 3/4 cents to US$4.02 1/4 per bushel, only the second time since late June it has closed above US$4. March corn ended up 11 3/4 cents to US$4.17 1/2.

 

The dollar's weakness dominated the days trade, driving crude oil, wheat, soy and a host of other commodities higher. The market followed the dollar "tit for tat," one trader said. The dollar index hit its lowest point since August 2008.

 

Funds bought an estimated 8,000 contracts on the day.

 

Traders also note the wet weather in the U.S. Corn Belt this week, which should again slow the harvest. The trade is expecting Monday afternoon's crop-progress report to show the harvest 50% to 60% complete, well behind schedule. The report will be released at 4 p.m. EST.

 

But fundamentals were in the background Monday. John Kleist, broker/analyst with Allendale, noted that last week's supplemental commitment of traders report from the Commodity Futures Trading Commission showed that even as traditional speculative funds were cutting their long positions, index funds tacked on almost 10,000 contracts to their long positions during the week.

 

"That's a good indication of what we're playing again today," Kleist said.

 

Traders have considered US$4 in the front month significant resistance for the market. Prices retreated after an early climb above that mark in early trade, only to surge back later in the day.

 

In other news, the Chicago Board of Trade will announce changes to its corn futures contract this week in response to concerns about vomitoxin levels in this year's crop, a spokeswoman said Monday.

 

The vomitoxin specifications would be a first for the corn contract, although they have long existed in wheat.

 

"Basically we'd add appropriate levels for vomitoxin in the corn supply," said Mary Haffenberg, spokeswoman for CME Group. "It would be very similar to wheat."

 

Traders said the changes could mean less deliverable corn, which would be supportive to prices. A couple traders said it would be bullish for spreads only.

 

Traders say it's unlikely, but not out of the question, that the CME would impose the limits on the December contract. The CME is more likely to wait until the March contract, they said.

 

CBOT oats futures ended higher. December oats ended up 1 1/2 cents to US$2.64 per bushel and March oats ended up 1 1/2 cents to US$2.77 1/2.

 

Ethanol futures were higher. December ethanol was up US$0.068 to US$2.082 per gallon and March ethanol was up US$0.052 to US$1.980.