Chicago Board of Trade corn futures ended mixed and mostly higher in a consolidation on Tuesday after this week's rally to a two-week high. The nearbys closed about a penny lower, with December down 1-1/2 cent at $3.60-1/2 per bushel. September 2008 to May 2009 ended 1/4 to 1-1/4 cent firmer.
"The products associated with biofuels are holding up well with the crude oil market," said one CBOT trader. Corn along with soyabean oil is used to produce US green fuels like ethanol and biodiesel. In fact, soyaoil notched a 23-year top in a spot contract overnight.
The crude oil market soared to an all-time high of $88.20 a barrel Tuesday amid a weak dollar and mounting tensions in the Middle East. Commodity funds sold about 2,000 contracts, with volume large overnight due to heavy spreading. An estimated 132,961 futures and 29,994 options traded, with overnight futures volume at 16,021 contracts.
The corn market was poised for a setback or consolidation after its technical rally that began Friday. Corn jumped the past two days on USDA's smaller-than-expected 2007 US crop estimate - even though it's expected to be a record of over 13 billion bushels - and hopes that the EU will import US corn if it goes through with plans to approve three GMO corn varieties on October 24.
For years, the European Union has been opposed to importing genetically modified corn as European consumers have been wary of GMO foods. They last agreed to authorise a new GMO product in 1998.
The EU move was viewed more psychologically supportive for corn futures than anything else as many doubted if US corn business to Europe would be boosted as it would be a nightmare to segregate and preserve the identity of the approved varieties with those that were not, traders said. But traders expected European imports of corn by-products like corn gluten and distillers' dried grain to increase.
Harvest was progressing at a fast clip but some rain delays were expected this week in the western belt. USDA reported late Monday that 53 percent of the corn crop was harvested, ahead of the seasonal average of 41 percent by mid-October. Midwest basis bids for corn were mostly steady at interior points and firmer at river terminals, reflecting a drop in barge freight.
CBOT oat futures closed lower, with December down 2 cents at $2.76 per bushel, pressured by the weakness in most of CBOT markets. Volume was thin estimated at 333 futures and 10 options.
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