January 14, 2010

 

CBOT Corn Review on Wednesday: Mostly lower amid follow-through selling

 

 

Nearby Chicago Board of Trade corn futures contracts continued their slide Wednesday, although the market trimmed losses later in the day and back-month contracts actually gained.

 

March corn ended down 8 1/2 cents to US$3.84 per bushel and May corn ended down 8 cents to US$3.95. But December corn, the second-most-active contract behind March, ended up 1 1/4 cents to US$4.18 3/4.

 

Traders said follow-through selling after Tuesday's plunge on a big 2009 crop weighed on prices Wednesday, and prices were more than 20 cents lower in early trade.

 

Tuesday's USDA reports have set "a bearish landscape," said John Kleist, broker/analyst for Allendale.

 

In addition to the big crop, prices are relatively high around US$4, he said.

 

Analysts also added that the sharp reduction in winter wheat acreage that the USDA reported Tuesday will mean that there will be plenty of acres left over to plant corn. This should limit the corn market's need to "buy acres" by boosting prices in the next few months, they said.

 

Index fund rebalancing was again a factor late in the session, pushing the March contract back above its 100-day moving average.

 

But traditional speculative funds, who poured into the market in the days leading into the report, ahead of the index fund buying, were heavy sellers during the session. Funds sold an estimated 30,000 contracts.

 

Traders added that end-users have used the price break to meet some needs.

 

"As we bounced off these lows, I've got cattle guys stepping up and wanting to buy corn," said Jason Britt, president of Central State Commodities.

 

Britt added that while the USDA's crop estimate was certainly bearish, the government's carryout projection only increased by 90 million bushels--not an increase big enough on its own to warrant the market's descent.

 

Technically, the market's outlook has turned bearish, although in the short-term it is oversold, analysts say.

 

CBOT oats futures ended lower Wednesday. March oats ended down 2 cents to US$2.50 1/2 per bushel and May oats ended down 2 cents to US$2.59.

 

Ethanol futures were lower. February ethanol ended down US$0.020 to US$1.793 per gallon and March ethanol settled down US$0.021 to US$1.799.