Monday December 28th, 2009

Harsh winter weather, outside market support and technical strength pushed Chicago Board of Trade corn futures higher Monday. The market was higher all day, trading within a tight five-cent range, and was led by wheat and soybeans, which both surged. Strength in wheat and soybeans was attributed to short-covering and technical buying, which were factors in corn as well. The nearby March corn contract has climbed above key major moving averages, and a couple of analysts said the market appeared to be on the verge of a breakout to the upside. The market also had support Monday from the heavy snow that hit the U.S. Midwest over the weekend, which slowed grain movement, strengthened basis and heightened concern about the more than 500 million bushels of corn still in the field. The unharvested corn represents at least one-third of the projected 2009-10 U.S. carryout, analysts said.

Soybean futures finished sharply higher Monday after rallying in late dealings amid technical buying. There were ideas the market was due for a bounce after recent losses. As of Thursday's close, January soybeans had lost 61 cents for the month. Soybeans finished firmer with neighboring corn and wheat. Weakness in the dollar and gains in crude oil were supportive to agricultural markets, a trader said. Weekly U.S. soybean export inspections of 51.9 million bushels also were considered strong. Demand remains supportive for the market. Traders are waiting for the U.S.D.A. to issue its next crop report Jan. 12. They may put some risk premium back into the market amid uncertainty about the size of the U.S. crop after a late harvest.

~Chris Spurlock