February 6, 2010

 

CBOT Corn Review on Friday: Ends down on outside markets; new low

 

 

Chicago Board of Trade corn ended lower Friday amid bearish outside markets and technical pressure, setting another four-month low in the process.

 

March corn ended down 2 1/2 cents to US$3.51 1/2 per bushel and May corn ended down 2 1/4 cents to US$3.63.

 

The market sagged throughout the second half of the day and fell as low as US$3.47 3/4 per bushel in late trade before clawing back above US$3.50 late.

 

But the trade reaffirmed the market's downward tilt, traders said. Weaker equities and crude oil, along with a stronger dollar, kept the market under pressure.

 

"What are commodities worth if the dollar keeps going higher and stocks keep breaking down?" a trader said.

 

The March contract lost five cents on the week, and the market continues to face relentless downward technical pressure, traders said.

 

Mike Zuzolo, president of Global Commodity Analytics and Consulting, said a lack of farmer selling and weather problems are supporting basis levels, limiting losses. A trader added that index funds appeared to be exiting positions in other commodities and buying grains.

 

But traders say large supplies remain a dominant theme. Traders are awaiting Tuesday's supply and demand report, and expect only minor changes to comfortable 2009-10 ending stocks. They also are expecting an increase in South American production.

 

The U.S. Department of Agriculture will release the report Tuesday at 2:30 EST.

 

Tim Hannagan, analyst for PFG Best, said there could be short-covering ahead of the report.

 

According to a U.S. Department of Agriculture attache report posted Friday on the Foreign Agricultural Services Web site, Brazil's 2009/10 corn production estimate remains at 51 million metric tonnes despite a 7% loss in planted area.

 

Funds sold an estimated 10,000 contracts.

 

While a lack of farmer selling has limited losses recently, some traders say that once the weather warms and quality problems re-emerge, producers will have to unload supplies quickly.

 

CBOT oats futures ended lower Friday. March oats ended down 2 1/2 cents to US$2.26 1/4 per bushel and May oats settled down 2 1/2 cents to US$2.35 1/2.

 

Ethanol futures were lower. March ethanol was down US$0.026 to US$1.749 per gallon and April ethanol was down US$0.026 to US$1.752.