December 9, 2009

 

CBOT Corn Review on Tuesday: Ends up on snowstorm; spread trade

A snowstorm barreling down on the U.S. corn belt helped Chicago Board of Trade corn futures hold firm despite outside market pressure Tuesday.

 

December corn ended up 3/4 cent to US$3.69 1/2 per bushel and March corn ended up 1 1/4 cents to US$3.85.

 

The day's gains were due to "88% of the crop harvested, a foot of snow and high winds," an analyst said, referring to the weather forecast for the next 24 hours. The U.S. Department of Agriculture said Monday that 12% of the crop remained unharvested, and the adverse weather could cause further problems.

 

The wet weather will keep producers out of the fields, and heavy winds on top of snow could cause some of the corn to "lodge," or fall over, which would make it more difficult to harvest.

 

Some traders are dismissing the impact of the snowstorm, however, noting at this point most of the crop is harvested and traders are looking at demand.

 

Traders and analysts said there was also some light spread trading Tuesday, as traders bought corn and sold wheat and beans. Terry Reilly, an analyst with Citigroup, said that the wheat-corn spread is favorable to corn.

 

Outside markets, including the dollar and crude oil, limited the market's gains, as did weak demand.

 

The market traded within an exceptionally tight 3 3/4-cent range in the March contract, and analysts said there is some positioning ahead of Thursday's USDA supply and demand report.

 

That report, to be released before the market opens Thursday, should show weakened export demand resulting in slightly higher new crop corn ending stocks, according to analysts.

 

The average analyst estimate for 2009-10 carryout in the report is 1.646 billion bushels, according to a Dow Jones Newswires survey, up from the November USDA estimate of 1.625 billion but below the 2008-09 carryout of 1.674 billion.

 

Estimates from the 17 analysts surveyed by Dow Jones Newswires ranged from 1.500 billion to 1.725 billion.

 

CBOT oats futures ended lower. December oats ended down 1/2 cent to US$2.42 per bushel and March oats ended down 2 1/2 cents to US$2.53.

 

Ethanol futures were mostly lower. January ethanol was down US$0.013 to US$1.969 per gallon and March ethanol was flat at US$1.880.