October 21, 2008


CBOT Corn Review on Monday: Climbs; short-covering, outside stability



Stable outside markets and short-covering sparked gains in Chicago Board of Trade corn futures Monday, although analysts said trading was light and there was little conviction in the rally.


December corn ended up 15 1/2 cents to US$4.18 1/2 and March corn ended up 15 3/4 cents to US$4.36 1/4 per bushel.


Prices closed near their session high. After tumbling in recent weeks, the market is primed for a rebound, traders said.


"I think we're just getting short-covering in (all) the pits, except for wheat," a trader said.


The trade was encouraged by stability and gains in equities, and soybeans also offered corn some support, traders said.


Despite the climb, traders say there remains little conviction in the market. An analyst notes that open interest has dropped substantially during the past month, at a time when it usually climbs due to hedge pressure from farmers during harvest.


"We're not seeing the obvious signs of new demand coming," said Dave Marshall, an independent commodity broker and advisor in Nashville, Ill.


Producers are saying prices are too low to sell, Marshall said, while the response from end-users and speculators is essentially "we don't care."


Volume was light Friday and again Monday, analysts added.


Traders and analysts say the market could continue to enjoy technical support for at least a few more days, with one trader saying last week's lows around US$3.75 will likely stand "for a while."


Harvest pressure is seen limiting gains, although the market could find support from some wet weather this week that will slow harvest, analysts said.


Traders and analysts estimate Monday's USDA crop progress report will show 25% to 35% of the crop harvested. Export inspections for the week ended Oct. 16 were reported at 26.874 million bushels, down from 30.738 million bushels the previous week. Export sales for the marketing year to date are also down, with 223.9 million bushels reported this year compared to 301.5 million bushels at the same time last year.


CBOT oats futures ended higher. December oats were up 6 cents to US$2.88 per bushel and March oats were up 6 cents to US$3.05.


Ethanol futures were higher. December ethanol ended up US$0.050 to US$1.790 per gallon and January ethanol ended up US$0.072 to US$1.812.