October 24, 2008


CBOT Corn Review on Thursday: Ends higher on short-covering, weather



Chicago Board of Trade corn futures bounced Thursday amid early outside market strength and short-covering, although the rally lost steam once equities headed back to negative territory.


December corn ended up 5 1/4 cents to US$3.90 1/4, March corn ended up 5 1/2 cents to US$4.06 1/4 and May corn ended up 5 1/4 cents to US$4.17 1/4.


Short-covering supported the market following Wednesday's sharp losses, traders said. The market climbed early, buoyed by an initial climb in the stock market, but corn "ran out of gas" at US$4 in the December contract, a trader said.


Outside markets remain the dominant force in corn futures, but some analysts said weather in the U.S. Midwest was bullish. Cold, wet weather in many areas is expected to further delay a harvest that is already behind.


A floor analyst said farmers want to give the crop time to dry in order to avoid artificial drying costs. But the longer they wait, the greater chance of the crop facing damage from adverse weather.


"It's dangerous to leave it out too long, too late in the season," the analyst said.


Other analysts said the weather is not a major concern, or just a minor factor in the market. Corn has "met or beat yield expectations somewhere along the way," an analyst said, and will not get as much support from the weather as soybeans, which are below expectations.


Stronger basis levels are also supporting corn, as farmers remain reluctant to sell their grain, analysts said.


"Even though futures have come down, you're firming up on that basis level," an analyst said.


A trader added that lower-than-expected planted acreage in Brazil could have offered support.


The market climbed more than 15 cents earlier in the day, "blowing through a gap" on the technical chart, a trader said. But corn later trimmed its gains, along with other commodities, as the stock market fell. The trade remains concerned about a global economic slowdown, which would depress demand.


CBOT oats futures ended lower, falling to their lowest price since September 2007. Oats posted only slight gains when other grains were higher and fell lower when those markets trimmed their gains. December oats ended down 10 cents to US$2.55 per bushel and March oats ended down 10 cents to US$2.72 1/4.


Ethanol futures ended higher. December ethanol was up US$0.050 to US$1.695 per gallon, and January ethanol was up US$0.054 to US$1.720.

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