December 24, 2008
CBOT Corn Review on Tuesday: Rallies on technical buys, soybean support
CBOT corn futures ended on a surge of strength Tuesday, climbing on spillover strength from soybeans, technical buying and dryness in South America, analysts said.
March corn ended up 13 cents to US$3.94 3/4 per bushel and May corn settled up 13 cents to US$4.05. The market closed near its session highs.
Underlying support is coming from recent gains in soybeans and thoughts that corn needs to keep pace as the two markets battle for acres in 2009.
"We can't allow the corn to fall too far out of line with where the beans are at," said Jason Britt, broker and analyst for Central State Commodities.
He added that there was spread trading early in the day, with selling of wheat and buying of corn.
But traders and analysts grasped for an explanation for the rally, which came despite weaker crude oil and poor demand.
"Some of it's techy, some of it's short covering end-of-year, some of it's [end-user] pricing," a trader said.
Dry crops in South America were supportive, a floor analyst said. He said dryness was more widespread in Argentina, but that there were also concerns in parts of southern Brazil. Some analysts think there has been enough rain in the region to prevent significant losses, however.
Prices were slightly higher in early trading. Corn's climb above its 50-day moving average helped encourage more buying, analysts said. Trading was light all day ahead of the Christmas holiday. The market will close early, at 1 p.m. EST on Wednesday, and will be closed Thursday.
March futures are in a pause after the recent corrective bounce from the contract low of US$3.05 1/2 scored on Dec. 5, a technical analyst said.
The recent price action has produced a "collapse in volatility" on the daily bar chart, which does suggest a bigger price move is on the horizon, he said.
CBOT oats futures ended lower. March oats were down 4 cents to US$2.15 per bushel and May oats ended down 4 cents to US$2.24.
Ethanol futures ended unchanged. January ethanol closed at US$1.559 per gallon and March ethanol ended at US$1.570.