December 22, 2009

 

CBOT Corn Review on Monday: Up amid spread trade, at key support

 

 

Chicago Board of Trade corn futures ended slightly higher Monday amid spread trading and underlying support from the late crop, traders said.

 

March corn was up 2 1/4 cents to US$4 per bushel, and May corn ended up 2 1/4 cents to US$4.10 3/4.

 

Despite bearish outside market influences, including a stronger dollar and weaker crude oil, corn held its own throughout the session, remaining stronger even as wheat and soys stumbled. Traders said there was some spread trading, with traders buying corn and selling wheat and soys.

 

A floor trader said that the corn-soy spread trade was partially technical, but that fundamentals were also a factor. Some traders and analysts are already looking ahead to the 2010 growing season, and the need for corn to maintain prices versus soys, in order to attract more acres next year.

 

The 2009 crop also remains an underlying factor, some analysts said, as the late harvest, and a snowstorm on the way later this week, fuel concerns that some of the crop could remain in the field all winter and be vulnerable to yield losses.

 

Traders and analysts are expecting this week's crop progress report to show 95%-96% of the crop harvested as of Sunday, up from 92% the prior week. The report is normally released on Monday but was postponed until Tuesday due to the heavy snow in Washingtonne, D.C.

 

In addition to closing right at the psychologically important US$4 mark, the market is also at or just above several key moving averages.

 

Funds bought an estimated 4,000 contracts.

 

Traders say the market could remain choppy but range-bound during the next week as volume is light due to the Christmas holiday. While the late crop is providing some underlying support, lackluster demand is limiting the upside, analysts say.

 

In international news, a USDA attache report says this year's corn harvest in Venezuela is expected to fall due to severe summer drought.

 

"For corn, a fall of about 20% in domestic production year-to-year to 1.5 million metric tonnes is estimated, with yields at about 3.5 metric tonnes per hectare," the report said. "Of that, some 500,000 metric tonnes are yellow corn."

 

CBOT oats futures ended lower. March oats ended down 1 3/4 cents to US$2.58 1/2 per bushel and May oats closed down 1 3/4 cents to US$2.66 3/4.

 

Ethanol futures were higher. January ethanol closed up US$0.016 to US$1.851 per gallon and March ethanol ended up US$0.007 to US$1.819.