January 23, 2009

 

CBOT Corn Review on Thursday: Down slightly, economic gloom weighs

 

 

Chicago Board of Trade corn futures ended lower on outside market pressure Thursday as the market traded in a tight range amid a lack of its own fundamental news.

 

March corn ended down 2 3/4, May corn ended down 2 1/2 cents to US$3.98 1/2 and July corn ended down 2 1/4 cents to US$4.09.

 

The bleak economic picture kept CBOT corn futures in negative territory, traders and analysts said. Lower U.S. equities and crude oil reinforced concerns about weak demand for commodities, traders say. The U.S. stock market stabilized later in the day, allowing corn to trim losses.

 

But there is little supportive fundamental news for the market, analysts said.

 

"It's sort of a battle between positive seasonals versus, at least in the case of corn, distinctly negative fundamentals, and a backdrop of just a deteriorating situation with the macro economy," said Joel Karlin, analyst for Western Milling.

 

Soybeans, which have mostly led corn in recent days, also were lower. Corn demand is much weaker than soybean demand, analysts said. Exports, ethanol and feed demand have all been poor.

 

Technically, the market is between support at the 50-day moving average of US$3.80 1/4 and resistance at US$4 in the March contract. The market is also below its 20-day average of US$3.95 3/4.

 

"We're going to see all the moving averages start to converge, and that's suggestive usually of a sharp move either way," Karlin said.

 

The market is monitoring South American weather, particularly rains forecast for Sunday in drought-stricken Argentina. "Sunday night will be big," a trader says, adding that corn could lose 30 cents if heavy rains materialize.

 

However, another trader added that "this forecast changes every day."

 

"You're trying to price something that's not going to happen until the end of the weekend and early next week," he said.

 

He anticipates more consolidation Friday barring any sharp moves in outside markets, with a breakout next week. Funds were light sellers Thursday, he said.

 

CBOT oats futures ended slightly lower. March oats were down 1 cent to US$2.13 per bushel, May oats were down 3 cents to US$2.22 1/2 and July oats were down 3 cents to US$2.32.