September 18, 2008

 

CBOT Corn Review on Wednesday: Soars; technical bounce, broad based buys

 

 

Chicago Board of Trade corn futures rallied Wednesday, bouncing on technical buying and broad based buying in the commodity sector.

 

December corn ended 21 3/4 cents higher at US$5.54, and March finished 19 3/4 cents higher at US$5.70.

 

A mixture of oversold market conditions, supportive fundamentals and the absence of follow through speculative liquidation that plagued the market in previous sessions buoyed prices, said Shawn McCambridge, senior grains analyst at Prudential Bache.

 

Soaring prices in outside markets, with crude oil rallying US$6.00 a barrel and gold futures up US$82 an ounce coupled with weakness in the U.S. dollar allowed buyers to become comfortable that aggressive sales would not emerge, McCambridge added.

 

Short-covering and end user buying was featured as well, with ideas U.S. Department of Agriculture crop production estimates may be overstated provided a psychological boost to aide the technical bounce.

 

The market traded on both sides of unchanged early, as traders were fearful of further repercussions from global economic factors, analysts said. However, as the day unfolded, buyers became comfortable, with strength in outside markets serving as the backdrop for the gains.

 

Nevertheless, there remains a cautious tonnee in the market among buyers, as the unpredictability of financial markets will continue to draw attention in the absence of fresh fundamental news. Favorable near term weather conditions late maturing crops and some harvest activity was seen limiting advances as well, traders said.

 

On tap for Thursday, USDA is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires anticipate sales in a range of 300,000 to 500,000 metric tonnes.

 

In pit trades, speculative fund selling was estimated at 6,000 lots.

 

CBOT oat futures closed higher. December oats climbed 6 3/4 cents to US$3.33 a bushel, and March oats jumped 6 3/4 cents to US$3.51.

 

Ethanol futures were firmer. October ethanol was up 3.7 cents at US$2.177 a gallon, and November ethanol was up 3.5 cents at US$2.157.

 

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