January 27, 2010

 

CBOT Corn Review on Tuesday: Lower on big crops, technical pressure

 

 

Abundant supplies, a stronger dollar and technical selling on Tuesday pushed Chicago Board of Trade corn futures to new lows for the current slump.

 

March corn ended down 5 1/2 cents to US$3.62 1/4 per bushel, and May corn ended down 5 1/2 cents to US$3.73 1/4.

 

The market was lower throughout the day, thanks in part to the dollar and concerns about a tightening fiscal policy in China that could limit demand.

 

Supplies are also bearish, with a huge 2009 U.S. crop and expectations that farmers will increase their corn acreage this year. South America is also expecting a very large crop.

 

Dave Marshall, an independent broker and adviser in Nashville, Ill., said it appeared that bearish midday weather updates for South America pushed the market below recent support at US$3.62 1/2, which triggered sell stops as the March contract fell to its lowest price since early October.

 

The new low makes a rally any time soon seem unlikely, analysts said.

 

"Before you go up, you've got to stop going down," Marshall said.

 

Also overhanging the market is concern about President Obama's bank reform plan, and how it could affect investment in the commodity markets. Speculative funds, which are still net long, have been trying to exit those positions, analysts said.

 

"My thinking right now is that you've got a lot of length yet that's trapped, trying to get out," said Jason Ward, analyst with Northstar Commodity. "You can see that every time that corn gets to the plus side, it finds sellers. I think those sellers are fund-related."

 

Producers are also selling on any rally, he added.

 

Market bulls are depending on an uptick in demand on the recent break from about US$4.25 two weeks ago. Some analysts say that end-user demand is limiting the downside.

 

CBOT oats futures ended lower Tuesday. March oats ended down 1 1/2 cents to US$2.31 3/4 per bushel and May oats settled down 1 1/2 cents to US$2.40 3/4.

 

Ethanol futures were lower. February ethanol dipped US$0.009 to US$1.798 per gallon and March ethanol ended down US$0.011 to US$1.789.