January 21, 2010

 

CBOT Corn Review on Wednesday: Down on dollar, technical factors; late bounce

 

 

Strength in the dollar, along with a bearish technical and fundamental picture, pushed Chicago Board of Trade corn futures lower Wednesday.

 

March corn fell 1 1/4 cents, or 0.03%, to US$3.68 per bushel. May corn ended down 1 1/2 cents to US$3.78 3/4.

 

The market set new lows for the recent slump in early trade Wednesday, as the technical picture becomes increasingly bearish, traders said.

 

"I think the trade has sort of a sell-the-rally mentality," said Joel Karlin, analyst for Western Milling. "For now the bearish factors predominate."

 

The main bearish factor, traders say, is the U.S. Department of Agriculture's huge 2009 crop estimate last week, which sent the market reeling. Traders are awaiting signs that the recent plunge in prices will prompt some buying from export customers.

 

Traders and analysts are also noting ideas that corn acreage will climb significantly in 2010, perhaps by as much as five- or six-million acres.

 

The market was lower throughout the day, but trimmed losses late.

 

One trader said the market found technical support around the US$3.62 area, which prompted the late bounce.

 

"We've got no reason to bounce, but we're technically oversold," the trader said.

 

Corn bulls are getting no help from outside markets. A stronger dollar, fueled by concerns about the Euro and a surprising Republican victory in a U.S. Senate race, weighed on commodities in general, traders said. They also noted that soy continued to sink and wheat was lower Wednesday.

 

South American weather continues to be "exceptionally favorable," Karlin said, which is bearish for soy especially but also for corn.

 

Farmers are unwilling to sell at current prices, a producer in north-central Iowa said on Wednesday, and are waiting for the market to rebound.

 

"We're all hoping," he said.

 

CBOT oats ended lower. March oats settled down 6 cents to US$2.20 per bushel and May oats settled down 6 cents to US$2.28 1/2.

 

Ethanol futures were lower. February ethanol settled down US$0.019 to US$1.762 per gallon and March ethanol settled down US$0.020 to US$1.759.