January 14, 2009

 

CBOT Corn Review on Tuesday: Extends slide on USDA estimates

 

 

Chicago Board of Trade corn futures fell sharply for a second straight day Tuesday, as the market continued to weigh the impact of higher-than-expected production and 2008-09 carryout estimates.

 

March corn ended down 18 1/4 cents to US$3.62 1/2 per bushel, May corn ended down 18 cents to US$3.73 1/4 and July corn ended down 18 cents to US$3.83 1/2.

 

The government's projected carryout of 1.790 billion will continue to hang over the market, traders said. What makes the market particularly shaky, said Jason Britt, President of Central State Commodities, is that even with the U.S. Department of Agriculture's bearish reports, "we're not so sure these numbers aren't done going up."

 

Demand remains weak for ethanol, feed and exports, analysts said.

 

Prices fell throughout the day and ended near session lows. Some traders and analysts saw support for the market around US$3.50. Britt said cattle producers are ready to jump in to the market around that price, considering the market has fallen 65 cents from its high a week ago.

 

"The speed of the descent will slow considerably as you get end-user pricing," Britt said.

 

A trader says the only positive news Tuesday is that with gasoline futures stabilizing and corn falling, margins for ethanol producers could begin improving, which would boost corn demand.

 

A rally in soybeans limited corn's losses, traders said, although soybeans trimmed gains later in the day. Britt also noted talk of corn-soybean spread trading.

 

Although soybeans also tumbled following Monday's report due to increased carryout and production estimates, that market was more resilient Tuesday. It is considered more apt to rally on dry South American weather because soy has a better demand outlook, a trader said.

 

CBOT oats futures ended lower. March oats ended down 4 cents to US$2.09 per bushel, May oats dipped 4 cents to US$2.18 1/2 and July oats ended down 4 cents to US$2.28.

 

Ethanol futures were lower. February ethanol ended down US$0.003 to US$1.582 per gallon and March ethanol ended down US$0.043 to US$1.572.