January 23, 2010

 

CBOT Corn Review on Friday: Lower on large supplies, fund selling

 

 

Chicago Board of Trade corn futures ended lower Friday, sagging amid fund selling and expectations that farmers are poised to plant more corn in 2010.

 

March corn ended down 7 1/4 cents to US$3.64 3/4 a bushel, and May corn ended down 7 1/4 cents to US$3.75 1/2.

 

The market was lower all day but extended its losses in the latter half of the session and ended near the session lows.

 

One factor in the weakness was Informa Economics' estimate that corn acreage would climb 3 million acres from 2009, said Mike Zuzolo, president of Global Commodity Analytics & Consulting. Although the report only changed the corn acreage slightly from the firm's previous estimate, Zuzolo said it inspired some spread trading, with buying of wheat and selling of corn.

 

Funds sold an estimated 11,000 contracts.

 

Outside markets, including lower crude and slumping equities, also weighed, as traders voiced concern about the impact of possible U.S. bank reforms because of statements from President Barack Obama this week.

 

The market slipped despite unexpectedly strong weekly export sales reported Friday. The U.S. Department of Agriculture said sales topped 1.6 million, a marketing year high, and confirmed to some traders that lower prices would attract new export buyers to the market.

 

"I guess I was kind of encouraged we sold corn, soybeans and wheat last week when we broke the market," said Sid Love, analyst with Kropf & Love Consulting.

 

The increased acreage would add to what is already a bearish supply outlook for corn. The 2009 crop is a record, the USDA said last week, and with farmers planting less winter wheat acres in 2010, many are expected to switch to corn.

 

Traders are also monitoring the weather in South America, with a heat wave in Argentina drawing some attention. Analysts are expecting huge South American crops this year.

 

CBOT oats futures surged Friday. Shawn Hackett, president of Hackett Financial Advisors, says that oats are a "hanging curveball" for bulls, as the market needs to climb relative to corn to secure more acres to avoid a supply shortfall. March oats ended up 10 cents to US$2.33 a bushel and May oats ended up 10 cents to US$2.42.

 

Ethanol futures were slightly lower. February ethanol was down US$0.006 to US$1.783 a gallon and March ethanol was down US$0.005 to US$1.779.