January 9, 2009

 

CBOT Corn Review on Thursday: Ends lower; weak exports, china weigh

 

 

Weak export demand, lower crude oil and an increased projection for China's corn crop sent Chicago Board of Trade corn futures lower Thursday, traders said.

 

March corn ended down 9 3/4 cents to US$4.06 3/4 per bushel, May corn ended down 10 cents to US$4.17 1/4 and July corn ended down 9 3/4 cents to US$4.27 1/2.

 

Analysts said the market was due to pull back after recent gains, and the bearish outlook was solidified by a China think-tank's projection Thursday that the country's crop would be 165.5 million tonnes, up 9.5 million tonnes from previous estimates.

 

"That think-tank number that came out of China is flat-out bearish," said Terry Reilly, analyst for Citigroup. "I wait for the day that an announcement comes across the wires that China sold a good amount of corn to one of its neighbors."

 

China has not been a corn exporter for several years, analysts said, but could be a significant player if it resumes exports. Reilly and other analysts said China would need to enact subsidies to make its corn competitive, however.

 

Other factors also weighed on corn, analysts said.

 

"We had disappointing weekly export sales, a little more of a chance for rain in Argentina," said Allendale analyst Joe Victor.

 

While some analysts said increased chances for rain in South America pressured corn, traders said the market will not break sharply until Argentina gets a good soaking. A projected reduction in Brazil's crop was supportive, analysts said.

 

The March contract traded a 12 1/2-cent range, within its high and low from the previous three days.

 

Lower crude oil pressured the market, traders said. Corn was seen following soybeans, which supported the market, although soybeans dipped near the end of the day and also ended lower.

 

The trade is looking ahead to Monday's U.S. Department of Agriculture reports. The USDA will release production, ending stocks and quarterly grain stocks estimates at 8:30 a.m. EST. The trade is, on average, expecting a slight increase in ending stocks and a slight decrease in production.

 

CBOT oats futures ended slightly higher. March oats ended up 1 cent to US$2.23, May oats ended up 1 cent to US$2.32 1/2 and July oats ended up 1 cent to US$2.42.

 

Ethanol futures were lower. March ethanol ended down US$0.024 to US$1.654 per gallon and May ethanol ended down US$0.017 to US$1.703.