October 10, 2008
CBOT Corn Review on Thursday: Climbs on short-covering ahead of report
Short-covering and end-user buying pushed Chicago Board of Trade corn futures higher Thursday, as the market bounced amid relative calm in world financial markets.
December corn ended up 10 3/4 cents to US$4.38 1/4 and March corn climbed 11 3/4 cents to US$4.55 3/4.
Traders said short-covering was the dominant feature of the rally, which extended gains from Wednesday. Prices opened several cents higher on closed near session highs.
Traders were positioning ahead of Friday's U.S. Department of Agriculture reports on crop production and supply and demand. The reports will be released at 8:30 a.m. EDT.
The market still has upside potential, said Daniel Pavilonis, senior market strategist for Lind-Waldock. Pavilonis and a floor trader both said the market could climb between US$4.50 and US$5 in the December contract, although both also expected the rally would lose steam and the market would eventually retest recent lows near US$4.
Traders said commercial buying has supported the market during gains the past two days. Weekly net export sales of 957,900 metric tonnes were higher than last week and above analyst expectations, also supporting the market.
But concern about the financial markets still lingers, an analyst notes. He added that he would be more comfortable calling a short-term bottom in the market Friday afternoon, after the USDA has released its reports.
Some traders said the market is already low and would see little effect from a higher production estimate. Others said a bearish report is the last thing the market needs after recent losses, and that higher-than-expected production estimates could put even more pressure on the market.
Analysts on average are expecting the government's projected corn yield to hold steady at 152.3 bushels per acre, with a slight increase in total production. Corn ending stocks are expected to climb slightly, to 12.076 billion bushels from 12.072 billion in the government's September report.
An analyst noted that the December 2009 contract was especially strong Thursday. Traders have said in recent weeks that the back months were likely underpriced because of the need for higher prices to prompt more corn planting next year. Dec 2009 corn climbed 13 1/2 cents to US$4.90 1/2.
"Maybe the trade's starting to push into more of an '09 psychology in terms of acres," the analyst said.
CBOT oats futures ended higher. December oats were up 4 1/2 cents to US$2.97 1/2 and March oats ended up 4 1/2 cents to US$3.14 1/2 per bushel.
Ethanol futures were higher. December ethanol ended up US$0.019 to US$1.859 per gallon and January ethanol ended up US$0.014 to US$1.853.