December 9, 2008
CBOT Corn Review on Monday: Posts strong gains on outside support
Chicago Board of Trade corn futures borrowed strength from outside markets Monday, bouncing after sharp losses last week.
December corn ended up 20 3/4 cents to US$3.14 1/4, March corn ended up 20 3/4 cents to US$3.30 and May corn ended up 21 1/4 cents to US$3.40 1/2.
The market opened sharply higher on support from higher crude oil and precious metals, a weaker U.S. dollar and surging equities markets. Corn traded a narrow range throughout the day after its initial ascent. Corn joined most other commodities in Monday's rally.
Although corn has little fundamental news to support it, after Friday's losses in what some analysts said was panic selling, "the corn market was deeply oversold at multiyear lows," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
The outside market strength helped prompt short covering, analysts said.
"Today you had everything line up: energies higher, equities higher and metals higher," Roose said. "And we have not matured to a place of our own fundamentals."
The market is trying to set a bottom, a floor trader said. But demand is weak, analysts said, limiting the market's upside potential.
"The key is whether we can actually maintain a rebound, and put a floor in," said Sid Love, analyst with Kropf and Love Consulting.
"It's really kind of hilarious; one day it's the end of the world, the next day people are singing 'happy days are here again,'" Love added.
The trade is also keeping an eye on weather in South America, which one trader said might have capped Monday's gains. T-storm Weather said Monday that corn prospects are likely to improve during the next week, as widespread and heavy rain is likely to focus on the driest areas of Brazil and Argentina during the next several days.
CBOT oats futures ended higher. December oats ended up 9 cents, to US$1.33 1/2, March oats ended up 9 cents, to US$2.08, and May oats ended up 9 cents, to US$2.17 1/2 per bushel.
Ethanol futures ended higher. January ethanol ended up US$0.070 to US$1.468 per gallon.