March 11, 2009
CBOT Corn Review on Tuesday: Climbs on equities, support for ethanol
Sharply higher equities and an improved outlook for ethanol helped Chicago Board of Trade corn futures post strong gains Tuesday, traders said.
March corn ended up 9 1/2 cents to US$3.66 3/4 per bushel; May corn rose 10 cents to US$3.75 1/2; and July corn ended up 10 1/4 cents to US$3.85 1/2.
The sharply higher U.S. stock market set the tonnee for corn and other commodities, traders said, as the Dow Jones Industrial Average was up more than 300 points for much of the day. Higher crude oil also provided support early in the day before retreating late, traders said. Corn closed about 5 cents off the day's highs.
The market has gotten a boost this week from comments by Secretary of Agriculture Tom Vilsack, who on Monday expressed his support for increasing the ethanol blending levels in gasoline to 12% to 13%.
The new Obama administration appears to be friendly to ethanol, a key customer for corn, analysts said.
"It's a friendly environment for alternative fuels," said Vic Lespinasse, analyst for grainanalyst.com.
The trade is awaiting Wednesday morning's supply and demand report, but analysts are already looking ahead to the March 31 quarterly grain stocks and planting intentions reports, which they said will be more significant.
Analysts expect the U.S. Department of Agriculture to peg 2008-09 corn ending stocks at 1.811 billion bushels, up slightly from February's estimate of 1.790 billion bushels, due to declining demand. The report is scheduled to be released at 8:30 a.m. EDT.
Although the market slipped slightly late, corn is close to breaking above key moving averages, traders and analysts said.
"We haven't forced the shorts out yet, but at this point it's starting to make them antsy," a trader said.
Some traders also note concerns about planting delays in the U.S. corn belt due to recent rains, although others say such talk is premature.
CBOT oats futures ended higher. March oats ended up 5 1/4 cents to US$1.81 per bushel, May oats climbed 4 1/4 cents to US$1.88 1/2 and July oats settled up 4 1/4 cents to US$1.97 1/2.
Ethanol futures were higher. May ethanol ended up US$0.026 to US$1.553 per gallon and June ethanol ended up US$0.027 to US$1.570.