January 6, 2009

 

CBOT Corn Review on Monday: Down slightly on dollar, farmer selling

 

 

A stronger dollar and continued farmer selling pushed Chicago Board of Trade corn futures slightly lower Monday, analysts said.

 

March corn ended down 1 cent to US$4.11 1/4 per bushel, May corn slipped 1 1/4 cents to US$4.21 1/2 and July corn was down 1 1/2 cents to US$4.31 1/2.

 

The stronger dollar makes U.S. exports, which have already been struggling, less attractive, analysts said.

 

Farmer selling has become a factor in the market during the past several days, said Mike Zuzolo, senior analyst for Risk Management Commodities. Farmers are selling right now for cash flow reasons and because basis has strengthened, he said.

 

South American weather has become a focus of the market, traders said, as many areas are at a key point in the growing season. But the news has been split; continuing dryness in Argentina is supportive to prices, while recent rains in Brazil, including in key growing areas, are bearish.

 

"To me, it's kind of a standoff," a floor analyst said.

 

Still, traders said concerns about the weather helped limit losses and will continue to do so.

 

"I don't think the market will break too badly until we get widespread rain in Argentina," a trader said.

 

After two-sided trade to start the session, the market was mired lower all day but rebounded late, trimming losses. JP Morgan and Fortis were noted as late buyers.

 

Strength in crude oil and soybeans limited corn's losses, traders added.

 

The market's early drop was halted when corn found support around US$4.04, a trader said. Corn had gained the previous three trading days of last week, but some traders say corn is overbought considering that demand remains weak.

 

The trade is starting to eye the U.S. Department of Agriculture's supply and demand report, which will be released Jan. 12. Zuzolo said another cut in projected demand is possible, and that bulls will be looking for a surprise on the supply side.

 

CBOT oats futures ended higher. March oats were up 4 cents to US$2.16 per bushel and May oats were up 4 cents to US$2.25 1/4.

 

Ethanol futures ended higher. January ethanol climbed US$0.011 to US$1.631 per gallon and March ethanol ended up US$0.006 to US$1.660.