September 20, 2008


CBOT Corn Review on Friday: Climbs on crop, crude, financial markets



Chicago Board of Trade corn futures climbed Friday on fundamental support as the market breathed a sigh of relief amid signs the global financial crisis was easing, traders said.


December corn ended up 15 cents to US$5.42 1/4 per bushel and March corn ended up 15 3/4 cents to US$5.59.


John Kleist, a broker/analyst with Allendale in McHenry, Ill., said Friday's jump was a "relief rally" based on ideas that the current global financial crisis has cooled down thanks to action by the U.S. government and central banks overseas. Corn had followed the outside markets all week, traders said.


"The market is happy it may not have to put up with any more forced fund liquidation," Kleist said.


A corn trader compared the financial markets to a patient dying in the emergency room. The Federal Reserve acted as the doctor, saving the patient's life when it had only one heartbeat left, he said.


Sharply higher crude oil Friday added support to the market, traders added. Higher crude oil supports corn because it increases production costs and because of corn's connection to ethanol.


With the stock market back where it started at the beginning of the week, the trade was able to refocus on fundamentals, including a bullish USDA crop production report released Sept. 12 that was lost amid the ensuing chaos this week, the trader said.


"If you turned the screen off (last) Friday and came back in today, you would think corn is legitimately priced higher," the trader said.


Kleist noted that Friday's high of US$5.48 in the December contract was the intraday low a week ago, on Sept. 12. "Old support is new resistance," he said.


Traders say weather forecasts were a minor influence on the market. The lack of a clear frost threat is good news for the crop, which was planted late, has developed late and needs time to mature, traders said. Now the crop needs some dry weather as it nears harvest, traders and agronomists said.


CBOT oats futures were higher. December oats ended up 6 3/4 cents to US$3.31 3/4 cents per bushel and March oats were up 6 cents to US$3.49.


Ethanol futures were higher. December ethanol ended up US$0.050 to US$2.175 per gallon and January ethanol ended up US$0.043 to US$2.189.


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