September 5, 2008

 

CBOT Corn Review on Thursday: Up slightly on technical buying, lack of news

 

 

Chicago Board of Trade corn futures climbed slightly Thursday on technical buying in an absence of fundamental news, analysts said.

 

September corn was up 2 3/4 cents to US$5.49 1/4, December corn was up 2 1/4 cents to US$5.64 1/2 and March corn was up 2 1/4 cents to US$5.83 1/4.

 

Traders and analysts said the climb was a modest correction from losses Tuesday and Wednesday, but that there was not much conviction behind the rally.

 

"What the market is trying to do is adjust and consolidate from pretty oversold conditions," said John Kleist, broker/analyst for Allendale in McHenry, Ill.

 

Corn's inability to break below US$5.50 in the December contract this week has encouraged some buying, analysts added.

 

The market climbed despite a dip in crude oil, which has teamed with a stronger dollar and concerns about world demand to push prices lower recently.

 

Weather is seen by some traders and analysts as a bearish effect on the market. Rainfall from Hurricane Gustav's remnants has drenched much of the U.S. corn belt and reduced the portion of the crop in need of a drink.

 

The absence of an early frost in the forecast is also good for the crop, traders said.

 

But other traders and analysts said the rain will be of little benefit to the crop at this point in the growing season. Kleist said he thought weather had not been a factor in the market for a couple weeks, and that the trade is "resigned" to a less-than-perfect crop.

 

"I think the market came to grips with the crop two weeks ago," Kleist said. "This rain means very little to it I think."

 

The trade is already looking ahead to the Sept. 12 crop production report, which analysts said could limit price extremes during the next few days.

 

Prices were volatile in early trading. After dropping a few cents initially, the market jumped more than 10 cents in a couple of minutes in a rally that left traders scratching their heads.

 

"It was on the screen, nothing transparent in terms of inputs," a trader said of the rally.

 

Corn prices retreated and stabilized soon after, remaining a few cents higher most of the day.

 

CBOT oats futures ended lower. September oats ended down 9 cents to US$3.28 per bushel, December oats ended down 9 cents to US$3.43 and March oats ended down 9 cents to US$3.60 1/2. The December contract has plunged to its lowest price since January.

 

Ethanol futures ended higher. September ethanol ended up US$0.010 to US$2.235 per gallon and December ethanol ended up US$0.044 to US$2.245.