February 5, 2009

 

CBOT Corn Review on Wednesday: Ends lower as poor fundamentals pressure

 

 

An absence of outside support opened the door for poor fundamentals to send CBOT corn futures lower Wednesday, analysts said.

 

March corn ended down 3 1/2 cents to US$3.58 1/4 per bushel, and May corn ended down 4 cents to US$3.68 3/4.

 

Although the market had opened higher on technical short-covering and support from soybeans, it retreated with outside markets, including wheat, which dragged corn lower, analysts said.

 

Demand is poor and not likely to get significantly better given the state of the world economy, traders said.

 

"We just don't have the fundamentals to sustain any kind of upside momentum at this point," said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

Bearish pressure came from lower crude oil and equities and a stronger dollar, traders added.

 

Recent support from the drought-stricken Argentina crop has been negated by recent rains. Although the rains won't reverse significant crop damage that has already been done, increased rainfall could prevent further devastation of the corn crop, analysts said. Rains are also beneficial for soybeans, which has been leading the market lately.

 

The market looks bearish technically, analysts said, with the March contract below all of its major moving averages.

 

Private analytical firm Informa Economics on Wednesday estimated Argentina's 2008-09 corn crop at 16 million tonnes, down one million tonnes from its estimate last month, traders said.

 

Last year, Argentina's corn production was 20.85 million tonnes, according to the U.S. Department of Agriculture. The USDA last month pegged Argentina's 2008-09 corn crop at 16.5 million tonnes. The agency will issue an updated estimate at 8:30 a.m. EST Tuesday.

 

The trade is looking ahead to Tuesday's supply and demand report. An analyst also said that Friday's U.S. jobs report could be significant for commodities markets as a sign of future demand.

 

CBOT oats futures ended slightly lower. March oats ended down 1/2 cent to US$1.87 per bushel and May oats ended down 1/2 cent to US$1.96 1/2.

 

Ethanol futures ended higher. February ethanol ended up US$0.020 to US$1.550 per gallon and March ethanol ended up US$0.007 to US$1.552.