September 23, 2008


CBOT Corn Review on Monday: Climbs on strong crude, weak dollar



Soaring crude oil and a sharply lower dollar bolstered Chicago Board of Trade corn futures Monday, as traders eyed the possibility of renewed strength in commodities owing to inflation.


December corn ended up 16 1/4 cents to US$5.58 1/2 per bushel, and March corn ended up 17 1/4 cents to US$5.76 1/4.


The U.S. dollar plunged following the government's plans for a bailout of the financial sector, and that has prompted talk of the "re-inflation of the commodity sector," a trader said. Prices jumped on Monday's open on follow-through buying from gains Friday and overnight, and remained higher all day.


A weaker dollar makes U.S. commodities more attractive for export. It also boosts crude oil, which gives added support to corn because of corn's tie to ethanol, analysts said.


However, recent concerns about a weaker global economy and its potential to dampen commodity demand lingers, traders said. Prices have fallen in recent weeks due to demand concerns.


"It's still in the back of everybody's minds," a trader said. "If we're in trouble, the rest of the world will be in trouble."


Fundamentals were a minor factor in Monday's trade, analysts said. A trader said the market's fundamental underpinnings don't support a strong rally.


Weather is seen as mostly bearish, with warm, dry weather guiding the crop toward a strong finish. There is also no significant threat of a frost in the forecast, and traders say the specter of an early frost decimating a late-planted crop grows less likely by the day.


Agronomists say the crop needs warm, dry weather for a strong finish to a troubled year. An Iowa agronomist said Monday that the crop there is benefiting from the current weather, and that with a couple more weeks of frost-free weather it will reach its yield potential, which is limited by early woes.


"We're having a great finish to a lousy year," said Roger Elmore, Iowa State University extension agronomist.


Looking ahead to next year, private analytical firm Informa Economics on Monday projected planting of U.S. corn at 90.5 million acres, up 3.5 million acres from 2008. A trader said the report probably had little effect on the market Monday.


"It's just a starting point, really," a trader said.


CBOT oats futures followed other markets higher, a trader said. December oats were up 9 1/4 cents to US$3.41 per bushel and March oats were up 9 1/2 cents to US$3.58 1/2.


Ethanol futures ended higher. December ethanol was up US$0.094 to US$2.265 per gallon and January ethanol ended up US$0.080 to US$2.269.


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