October 18, 2008


CBOT Corn Review on Friday: Bullish outside signals drive rally



Chicago Board of Trade corn futures followed bullish signals as the market closed Friday, inspired by rallies in all the major stock indexes after historic sell-offs the previous week.


The most active December corn gained 18 1/2 cents to settle at US$4.03 a bushel, off the day's high of US$4.09. March corn gained 19 cents a bushel to close at US$4.20 1/2.


After declining from the double tops charted in the last several days, bond prices dropped and yields increased.


"A positive sign," a CBOT floor trader said, noting crude oil also logged gains.


Equilibrium is nearing, the trader said, noting "I think you'll see some normalcy coming back into commodities."


Speculative funds bought an estimated 4,000 corn contracts.


The market was oversold and due for a bounce heading into Friday's trading session, another trader said.


Traders said they expected about 25%-30% of the nation's corn crop to be harvested when the U.S. Department of Agriculture releases its weekly crop progress report at 4 p.m. EDT Monday.


Credit Suisse lowered its estimates for 2009 corn prices to a range of US$4.00-US$4.25 per bushel from its previous estimate of US$5.00-US$5.50 per bushel.


"Our reductions are in line with the Credit Suisse oils team's forecast reduction (Thursday) for crude oil from US$110 to US$75 per barrel," said Credit Suisse analyst Robert Moskow.


Moskow raised his ethanol expansion forecast for 2009 given dry milling's improving margins on moderating corn prices.


"In addition, there will be less political pressure to reduce ethanol subsidies in 2009 given the prospects of declining food inflation, tougher economic conditions for U.S. farmers, and the low odds of a Republican win in the presidential campaign," he said.


In other markets, CBOT December oat futures closed 1 1/2 cents higher at US$2.82 a bushel.


Ethanol futures also saw gains with the nearby December ethanol contract US$0.089 higher at US$1.740 per gallon.


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