January 16, 2009

 

CBOT Corn Review on Thursday: Dips slightly on poor exports, wheat

 

 

Chicago Board of Trade corn futures ended slightly lower Thursday as poor demand and losses in wheat outweighed a rally in soybeans.

 

March corn ended down 1 1/4 cents to US$3.65 1/4, May corn dipped 1 1/4 cents to US$3.76 1/4 and July corn settled down 1 1/4 cents to US$3.86 1/2.

 

Corn and soybeans continue to hang their hat on very dry weather in Argentina, but any corn rally is limited by demand, which was underscored by poor export sales reported Thursday. Sales of 216,100 metric tonnes were a marketing year low.

 

"The fact of the matter is that demand is horrible, outside markets are lower, and demand is going to continue to tank," a trader said.

 

Lower crude oil and a stronger dollar added to the pressure, analysts said.

 

Corn traded both sides of unchanged early in the day, but was mostly flat for the rest of the session.

 

"It's just getting ripped between soybeans and wheat," said Sid Love, analyst for Kropf and Love Consulting.

 

Wheat was lower because, like corn, it had weak export sales reported Thursday, while soybeans posted strong gains because of dry South American weather, Love said.

 

Mike Zuzolo, senior analyst for Risk Management Commodities, said the corn market is "respectful" of the South American weather but was more closely tied to wheat Thursday because corn and wheat practically "shared a truckload" in total export sales for the week.

 

The trade continues to talk about Monday's bearish U.S. Department of Agriculture estimates for much larger corn carryout. But Love said corn "can't run corn too far away from soybeans" lest corn starts to lose acres for 2009.

 

Analysts noted that ideas that China will export some of its bumper corn crop is negative for prices.

 

Technically, corn lost it's 50-day moving average support after breaking on the USDA estimates, and if the market takes out its lows for the week next support isn't until US$3.37 in the March contract, Zuzolo said.

 

He added that technical strength in the dollar could trigger more selling in the grains markets. A stronger dollar makes U.S. exports less attractive.

 

CBOT oats futures ended slightly higher. March oats climbed 1 cent to US$2.17 a bushel and May oats ended up 1 cent to US$2.26 1/2.

 

Ethanol futures were lower. February ethanol ended down US$0.023 to US$1.548 a gallon and March ethanol was down US$0.008 at US$1.560.