July 25, 2008


CBOT Corn Review on Thursday: Climbs slightly on short covering



Chicago Board of Trade corn futures rebounded slightly Thursday as an oversold market prompted short covering, traders said.


September corn closed up 1 1/2 cents at US$5.73 per bushel, December corn closed up 1 1/2 cents at US$5.92, and March closed up 1 1/2 cents to US$6.11 1/4.


The market settled higher for the first time in six trading days. Analysts said that after breaking more than US$2, the market was due to bounce. But they added that there seemed to be little support for a strong, sustained rally.


Prices have fallen this week amid widespread commodity liquidation. But Thursday's slight jump in crude oil prices along with a mixed dollar provided some stability for corn, traders said.


"The market is oversold and you see some short covering," a trader said.


The market may move sideways for a while now that the weather premium has been completely erased, analysts and traders said.


"Just on the sheer size of the correction in so short a period of time, the market may want to pause and a take a look around and see what else is going on," said John Kleist, analyst/broker for Allendale.


Trade was "real thin" Thursday, accentuating a rally that tapered off right before the close, a trader said.


There was little fresh fundamental news, traders said, although signs of increased demand are providing some support.


A trader noted that the Japan's purchase of 244,696 metric tonnes of corn from the U.S., announced Wednesday, was a sign of increased demand from commercial buyers.


"Corn has reached a point where it's getting business, and it's tremendously oversold," a trader said.


Although the weather premium for corn has been taken out, analysts said it is still a weather-driven market. Forecasts remain benign with no excessive heat expected.


The market is also being pressured by soybeans, which have continued to fall on the good weather, traders said. There is still more weather premium to be taken out of soybeans - since the crop fills pods in August - as opposed to corn, which pollinates in July, analysts said.


CBOT oats ended higher amid short covering, a trader said. September oats were up 5 cents to US$3.90, December oats closed up 4 1/2 cents to US$4.07 1/2 and March oats ended up 4 1/2 cents to US$4.26 1/2.


Ethanol futures ended higher. September ethanol was up US$0.035 to US$2.295 per gallon and December ethanol was up US$0.048 to US$2.308.


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