December 11, 2008


CBOT Corn Review on Wednesday: Climbs on technical strength, crude support



Chicago Board of Trade corn futures surged higher Wednesday, gaining on technical strength and outside support, traders said.


December corn ended up 14 1/2 cents to US$3.26 3/4, March corn settled up 14 1/4 cents at US$3.42 and May corn gained 14 1/4 cents to US$3.52 3/4.


The market gained for the second time in three days after sharp losses last week.


"Technically, the market is showing some very strong signs," said Allendale broker/analyst John Kleist, referring to the market's strength since setting a low of US$2.90 in December last week. "Now, fundamentally you've got to prove it."


The market can do that Thursday by holding firm in the face of the government's supply and demand report, which the trade expects to be bearish, Kleist said.


Analysts expect the U.S. Department of Agriculture to peg ending stocks at 1.232 billion bushels, up from a November estimate of 1.124 bushels, due to weak demand. Traders said there was little concern about the pending report on Wednesday and that it is already reflected in current prices. The report will be released Thursday at 8:30 a.m. EDT.


A couple of traders said the market tracked crude oil, which was higher throughout the day. Corn bumped against its 10-day moving average, but did not close above it.


Corn opened strong and stayed higher, although it fluctuated before closing near the session high. A trader said the market has shown signs of setting a bottom, although there will be setbacks on the rebound. "You don't just turn a trend on a dime," the trader said.


Weak demand for exports, ethanol and feed continues to limit upside potential, analysts said. But some consider corn to be a good bargain around US$3.


CBOT oats futures ended higher. December oats ended up 2 cents at US$1.95 1/2, March oats ended up 2 cents at US$2.10 and May oats ended up 2 cents at US$2.19 1/2 per bushel.


Ethanol futures were higher. January ethanol ended up US$0.026 at US$1.482 per gallon and March ethanol settled up US$0.027 at US$1.495.


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