January 8, 2009
CBOT Corn Review on Wednesday: Slips on crude, profit-taking, weather
CBOT corn futures ended lower Wednesday, as the market gave back much of Tuesday's gains amid profit-taking and bearish outside markets, traders said.
March corn ended 11 cents lower to US$4.16 1/2 per bushel, May corn ended down 10 3/4 cents to US$4.27 1/4 and July corn fell 10 3/4 cents to US$4.37 1/4.
A sharp drop in crude oil prices pressured the market, traders said. Also, South American weather, which had supported the market recently, turned bearish, traders added, with forecasts calling for more rain that should help the crop. Argentina in particular is entering a critical pollination period and needs rain for the crop.
Positioning ahead of Monday's U.S. Department of Agriculture reports and ahead of expected fund re-balancing added pressure, traders said. The USDA will issue ending stocks, quarterly stocks and production reports at 8:30 a.m. EST Monday.
But the drop isn't enough to destroy corn's recent upward trend, traders said. One trader said if the market continues to set new highs that trend-following funds might buy more corn, accelerating the rally.
The 20-day moving average inched above the 50-day moving average Wednesday for the first time since July 25.
While some traders say funds are re-entering the market, others point to lackluster open interest as evidence that the recent rally has been fueled by short-covering.
Demand remains weak, traders said, and there has been little positive news to support corn's recent rally of more than US$1. But corn has proved resilient lately even in the face of bearish news and outside markets, an analyst said.
"I will say one thing about these grains markets: They have been defying gravity," says Sid Love, analyst for Kropf and Love Consulting.
CBOT oats futures ended lower. March oats were down 6 cents to US$2.31 1/2 per bushel and May oats were down 6 cents to US$2.41.
Ethanol futures ended lower. March ethanol ended down US$0.032 to US$1.678 per gallon.
