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Corn stages late rally Tuesday

11/01/2011 @ 3:48pm

U.S. grain and soybeans ended mixed Tuesday, with grain futures shrugging off pressure from external financial markets to stage a late-day rally.

The corn market led the way higher in grain futures, fueled by bargain-hunting buying by end users such as processors and grain merchants.

End users of corn were encouraged by the grain's ability to withstand the negative influences of a stronger U.S. dollar and investors' unease amid renewed concerns about Europe's debt crisis.

Traders said bargain-hunters, convinced prices were poised to climb, boosted corn. Corn has remained resilient throughout a volatile period for grain markets, finding support from less risk of further downward adjustments in demand.

The general feel in the market is there is not a great deal of downside potential for corn demand, with strong domestic usage for ethanol and livestock feed, said Shawn McCambridge, senior grains analyst with Jefferies Bache in Chicago.

Slowing export demand for U.S. corn has allowed macroeconomic influences to direct prices. However, corn is holding up in the face of these pressures, as it has the least exposure to exports, particularly to Europe, said Dave Marshall, an independent broker from southern Illinois.

However, traders are voicing concern about the extent of the rally, which occurred in the last 30 minutes of trading, suggesting something else may have been at play. Linn Group's Jim Riley says perhaps the rally stemmed from MF Global's liquidation, which "could mean liquidating shorts, too." He also notes traders were awaiting new crop estimates from INTL FCStone due after the close.

Wheat futures end mixed, rebounding from early lows in the last 30 minutes of trading on support from a rally in corn. Wheat was dependent on corn for price strength, as lackluster export demand remains a hindrance to upside price potential.

A stronger U.S. dollar and slumping equities kept grain and oilseed markets under pressure for most of the day. Soybean futures were unable to withstand the weakness from external markets, with fear of slower global demand and favorable outlooks for South American crop potential weighing on prices as well.

CBOT December corn ended up 7 1/4 cents at $6.54 1/4 per bushel, up 22 cents from its intraday low. CBOT January soybeans ended down 14 3/4 cents at $12.02 1/2 a bushel.

CBOT December wheat ended up 1 3/4 cents at $6.30, 16 cents off its intraday low. MGEX December wheat ended down 3 cents at $9.05 3/4; KCBT December wheat closed down 6 1/2 cents at $7.18 1/2.

Other Markets

CBOT December soyoil dropped 0.37 cent to 50.80 cents per pound, and December soymeal fell $5.40 to $310.70 per short ton.

Ethanol for December delivery ended up 0.9% at $2.663 per gallon. Oats for December delivery rose 1/2 cent, or 0.1%, to close at $3.35 a bushel.

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