US corn futures gained on Tuesday on a recovery bounce from the limit-down close on Monday and on gains in crude oil, traders and analysts said. "Markets are trying to bounce and there was some buying on breaks, crude oil being up is another reason for the gains," said Roy Huckabay, analyst for The Linn Group.
Corn has closely followed the trends of crude oil because of the production growth of ethanol, which is made from corn in the United States. Corn fell sharply on Monday amid nervous selling after investment bank Bear Stearns was purchased by J.P. Morgan Chase at a "fire sale" price of only $2 per share.
At 10:19 am CDT (1519 GMT), Chicago Board of Trade corn was up 6-1/2 cents per bushel to down 1/4, with May up 5-1/4 at $5.44-1/4 per bushel. The May contract on Monday closed below previous support at its 20-day moving average of $5.53, which is now an area of resistance. Overnight, May held above next support at its 50-day moving average of $5.26 per bushel.
The nine-day relative strength index was at 45. Traders view an RSI of 70 or more as one indication of an overbought market and 30 or less as an indication of an oversold market. Oat futures were 2 to 7 cents per bushel higher, with May up 2-1/4 at $3.74-3/4 per bushel.