February 11, 2009

 

CBOT Corn Review on Tuesday: Slightly lower as soy, equities weigh

 

 

Chicago Board of Trade corn futures ended slightly lower Tuesday on pressure from soybeans, equities and rainfall in Argentina, traders said.

 

March corn ended down 3/4 cent to US$3.76 3/4 per bushel, about 8 cents off its low. May corn ended down 1 cent to US$3.87, and July corn ended down 1 1/4 cents to US$3.97 1/4.

 

Although Tuesday morning's supply and demand report was initially viewed supportive to corn because it did not include an expected increase in 2008-09 ending stocks, traders later said the estimates were pretty well priced into the market already. One analyst said the report from the U.S. Department of Agriculture was "no great shakes," and another called it "milquetoast."

 

Corn was left with no other bullish inputs, traders and analysts said, particularly in the face of lower soybeans and wheat, and tumbling U.S. equities.

 

"The bullish aspect from the adverse weather in South America has been pretty much played out," said Joel Karlin, analyst for Western Milling.

 

But others said the market continues to closely track weather in Argentina. Near-term rainfall was bearish, traders said, while long-term dry forecasts were bullish.

 

Crop losses in Argentina and Brazil prompted the USDA to cut its projected carryout for both countries in Tuesday's report.

 

The market is range-bound, analysts say. A trader said that compared with last year's bullish environment, this year the market is "swimming upstream" and unable to generate any sustained rally without a strongly bullish reason. Buyers are less aggressive, he said.

 

"They don't put a long on and go to sleep with it," he said.

 

Generally weak demand remains the cause of the market's weakness, although traders and analysts note that export sales have picked up in recent weeks.

 

Karlin said one potential reason for the rise in exports is a rebound in rising bulk freight rates, which have prompted buyers to enter the market before prices climb higher.

 

In export news Tuesday, the USDA announced private export sales of 206,000 metric tonnes of U.S. corn for delivery to Mexico in the 2008-09 marketing year.

 

CBOT oats futures ended slightly lower. March oats ended down 1 1/2 cents to US$1.94 1/2 per bushel and May oats ended down 1 cent to US$2.04.

 

Ethanol futures were slightly lower. March ethanol ended down US$0.004 to US$1.611 per gallon and May ethanol ended down US$0.007 to US$1.630.