December 12, 2008
CBOT Corn Review on Thursday: Climbs on technical strength, strong exports
Outside market support and technical strength pushed Chicago Board of Trade corn futures higher Thursday, extending a rally despite a bearish government estimate of ending stocks.
December corn ended up 11 1/4 cents at US$3.38 a bushel, March corn ended up 9 1/2 cents at US$3.51 1/2, and May corn ended up 9 3/4 cents at US$3.62 1/2.
Corn's climb came even in the face of Thursday's U.S. Department of Agriculture supply-and-demand report, which raised 2008-09 ending stocks by 350 million bushels to 1.474 billion bushels.
"Bottom line, I think it's a very constructive sign here, strong as we've seen in I don't know how long, probably since the highs were put in," said Marty Foreman, a senior economist for Doane Advisory Services.
Traders said the market had already priced in an increase in ending stocks. Still, the USDA projection was higher than any of 14 estimates from analysts surveyed prior to the report.
Many traders and analysts say technically the market is gaining momentum and has likely set a near-term bottom. Last Friday, December corn hit a low of US$2.90. March corn hit US$3.06 that day.
Strong export sales above 1 million metric tonnes added to Thursday's bullish sentiment, traders said. The market closed 4 to 6 cents off its highs.
"You've got a bearish report and it climbed on bearish news," a trader says. "That's always a good sign."
Analysts note weakness in the dollar, which appears to have set a top, as a supportive factor, along with higher crude oil.
But commercial buyers are still operating hand-to-mouth, a trader said, and corn will be a "two-steps-forward-and-one-step-back kind of market."
CBOT oats futures ended slightly lower. March oats ended down 1/2 cents at US$2.09 1/2 a bushel and May oats ended down 1/2 cents at US$2.19. Thursday's USDA supply-and-demand report raised oat imports and projected ending stocks by 5 million bushels.
Ethanol futures were higher. January ethanol ended up US$0.036 at US$1.518 a gallon, and March ethanol settled up US$0.037 at US$1.532.