November 15, 2008

 

CBOT Corn Review on Friday: Ends higher on short covering, wheat support

 

 

Late short covering and spillover strength from wheat supported a modest climb in Chicago Board of Trade corn futures Friday.

 

December corn ended up 3 1/4 cents to US$3.80 1/4 per bushel, March corn ended up 3 1/2 cents to US$3.97, and May corn ended up 3 3/4 cents to US$4.08 1/2.

 

The market was lower for much of the day, as outside markets, particularly U.S. stocks, applied pressure to commodities. But corn didn't re-test the new seasonal low set this week at US$3.60 1/4, and a short-covering rally pushed the market into positive territory late.

 

"You had the sense that if the outsides would let us breathe, we'd close higher," a trader said. "That's pretty much what happened."

 

U.S. stocks trimmed what had been substantial losses, easing the pressure on corn. A turnaround in wheat, which has held support at US$5, has given corn support all week, traders added. Farm Futures analyst Arlan Suderman said that wheat's strength has given a base of support for corn both in prices and open interest.

 

Still, the market continues mainly to track U.S. stocks and crude oil.

 

"With the weekend coming up I don't think there's much courage to go outside what's been safe lately, and that's to trade the outside markets," Suderman said.

 

Some grains traders are tiring of the constant focus on outside markets, which have been very volatile and mostly negative.

 

"Right now there's no confidence in the system," a trader said. "It's too choppy for a fundamental grain trader."

 

Another trader said that both the grains and the equities have been showing encouraging signs. In particular, both markets have held above their lows despite continued bad news. Corn managed to gain despite export sales reported Friday that continue to be "horrible." December corn gained 4 3/4 cents on the week.

 

The global economic swoon has dampened demand expectations for corn and other commodities. End-users, content to let the market continue to fall, have been buying small quantities to meet their immediate needs, analysts say.

 

Wet weather in the U.S. corn belt has been supportive all week, but analysts say producers should likely be able to make better harvest progress next week.

 

CBOT oats futures ended lower. December oats were down 10 1/2 cents to US$2.15 1/2 per bushel, and March oats were down 10 1/2 cents to US$2.31 1/2.

 

Ethanol futures were higher. December ethanol was up US$0.013 to US$1.661 per gallon and January ethanol was up US$0.015 to US$1.650.