February 4, 2009

 

CBOT Corn Review on Tuesday: Slides on improving Argentina weather

 

 

Improving Argentina weather pushed Chicago Board of Trade corn futures lower Tuesday, traders said.

 

March corn ended down 8 3/4 cents to US$3.61 3/4 per bushel, May corn ended down 9 cents to US$3.72 3/4, and July corn ended down 9 1/2 cents to US$3.83.

 

Heavy rains in some parts of Argentina overnight, coupled with forecasts for more rain in the next several days, has negated the only bullish influence on the market, analysts said.

 

"It's not clear to me that this is the beginning of the end of the drought, but at least we look like we've gotten enough rain to stabilize the corn crop for the next week or two," said Marty Foreman, analyst for Doane Advisory Services.

 

Fundamentals in the market are weak, analysts said. Demand is poor for feed and ethanol, and does not figure to pick up soon given the state of the global economy.

 

"When you look at it, you question why corn is hanging up as well as it is," said Dale Durchholz, analyst for AgriVisor.

 

Analysts note that unlike soybeans, corn has not broken below its January low, which for corn is at US$3.58 1/2. Durchholz said one possible reason for corn's relative strength compared to soy is the idea that corn is in danger of losing more acreage to soybeans.

 

Still, technically the market is looking weak, traders said, with the market below all of its major moving averages.

 

The market typically dips in February, and corn could give up more ground soon because of farmer selling, which is overdue, a trader said.

 

"Farmers need to wake up and start selling or (else)," he said.

 

Foreman said the market will take its direction from soybeans this month because that crop is in a critical stage. Weather forecasts for South America will have direct bearing on soybeans, less so on corn because the damage to corn has already been done, analysts said.

 

The trade is beginning to look ahead to the U.S. Department of Agriculture's Feb. 10 supply and demand report. Expectations of flat or lower usage "will likely limit buying the rest of the week," DTN analyst David Fiala said in a market commentary.

 

CBOT oats futures dipped further below UUS$2. March oats were down 5 cents to UUS$1.87 1/2 per bushel, May oats ended down 5 1/2 cents to US$1.97 and July oats ended down 5 1/2 cents to US$2.06 1/2.

 

Ethanol futures extended their slide from Monday. February ethanol ended down UUS$0.038 to US$1.522 per gallon and March ethanol ended down US$0.016 to US$1.545 per gallon, the contract's lowest close since Dec. 11.