February 9, 2010

 

CBOT Corn Review on Monday: Ends up amid pre-USDA short-covering

 

 

Chicago Board of Trade corn futures ended higher Monday amid short-covering ahead of Tuesday's supply-and-demand report and widespread commodity gains.

 

March corn ended up 4 1/2 cents at US$3.56 a bushel, and May corn ended up 4 1/2 cents at US$3.67 1/2.

 

Wheat and soy also enjoyed a bounce following recent losses, as a weaker dollar gave support to commodities in general. The gains were mostly attributed to short-covering. Prices were up by more than a dime in early trading before retreating.

 

The market is well off its January highs around US$4.25, but many traders think further downside is limited after the market briefly dipped below US$3.50 last week.

 

University of Illinois Agricultural Economist Darrel Good said in a Monday outlook that signs of a near-term low in corn have emerged and that March has support around US$3.50.

 

"After the sharp decline of recent weeks, a modest recovery in corn and soy prices is expected," Good said. "The recovery, however, is not expected to push prices back to the early-January level."

 

A couple of traders added that the Commodity Futures Trading Commission's commitments of traders reports were supportive, as they showed the market has rid itself of many of the longs that have been trying to flee the market since it started its slide last month.

 

Market participants are looking ahead to Tuesday's supply-and-demand report, which will be released by the U.S. Department of Agriculture at 8:30 a.m. EST. Analysts are expecting a slight reduction in projected 2009-10 U.S. carryout Tuesday, but fundamentally the market has little reason to rally, they said.

 

Arlan Suderman, analyst for Farm Futures, said he is "skeptical" of such gains in February, when the market typically trends lower, and said profit-taking could follow.

 

Demand hasn't been spectacular recently, and the USDA Monday said weekly grain inspections for export totaled 27.102 million bushels, down from 39.447 million the prior week.

 

CBOT oats futures ended higher. March oats ended up 4 3/4 cents at US$2.31 a bushel and May oats ended up 4 1/2 cents at US$2.40.

 

Ethanol futures were higher. March ethanol was down US$0.008 at US$1.757 a gallon and April ethanol was down US$0.008 at US$1.760.