January 22, 2009

 

CBOT Corn Review on Wednesday: Ends higher on soy, wheat, Argentina crop

 

 

Chicago Board of Trade ended higher Wednesday on strong outside markets, including neighboring wheat and soybeans, as concerns about drought in Argentina fueled support.

 

March corn ended up 6 3/4 cents to US$3.90 1/4 per bushel, May corn ended up 6 1/4 cents to US$4.01 and July corn ended up 5 3/4 cents to US$4.11 1/4.

 

Prices climbed around midday after the government in Argentina cut its projected soybean, corn and wheat acreage due to drought.

 

"That just chased the sellers out of the pit," said Arlan Suderman, analyst for Farm Futures.

 

The government's forecast for corn area was trimmed just slightly, to 3.4 million hectares from 3.5 million hectares. The cut was smaller than cuts to soybean and wheat planting. But the government also noted that drought has taken a toll on the crop during its crucial pollination period, and that high yields are unlikely.

 

Continued dry weather in Argentina is supportive to the market, although weak demand is keeping a lid on gains, analysts said.

 

Technically, the market settled midway between its 50-day moving average and resistance at US$4 in March.

 

"If you'd seen us bump above US$4, you probably would have seen us match the (percentage) gains in soybeans," Suderman said.

 

Many analysts have focused on the corn-soybean spread recently, and have said that soybean prices can't climb much further ahead of corn because of the potential impact to corn acreage.

 

Stable outside markets aided the market's bounce, as crude oil was stronger and U.S. equities rebounded, calming traders jittery about the economy and the affect of a worldwide recession on demand.

 

Funds bought an estimated 6,000 contracts.

 

CBOT oats futures ended slightly higher. A trader said hedge pressure limited gains. March oats ended up 2 cents to US$2.16 per bushel and May oats ended up 2 cents to US$2.25 1/2.

 

Ethanol futures ended lower. February ethanol ended down US$0.028 to US$1.584 per gallon and March ethanol ended down US$0.031 to US$1.586.