February 13, 2009

 

CBOT Corn Review on Thursday: Dragged down by economy; exports support

 

 

Weaker crude oil and pessimism over the economy dragged Chicago Board of Trade corn futures into negative territory late in the session, traders said.

 

March corn ended down 2 1/4 cents to US$3.66 1/4, May corn ended down 2 1/2 cents to US$3.76 and July corn ended down 2 1/2 cents to US$3.85 1/2.

 

Farm Futures analyst Arlan Suderman said "uneasiness with the economic picture" weighed, as U.S. stocks fell again.

 

"I think there's just too much of a headwind for corn today to be able to sustain any gains," Suderman said.

 

Prices were higher most of the day, supported by strong export sales, before retreating late. Crude oil and soybeans' move lower added to the pressure, traders said.

 

A fourth consecutive week of strong export sales reinforced ideas that corn does not need to drop any lower to stimulate demand. The U.S. Department of Agriculture reported weekly net sales at 1.54 million metric tonnes, although traders said there was speculation that the sales were inflated due to a clerical error. Noting an unusually high total of sales to "unknown destinations" exceeding 600,000 tonnes, traders said there were ideas that the corn was sold in previous weeks and reported late.

 

But traders and analysts said the sales were strong regardless. Weekly sales have topped 1 million metric tonnes for four straight weeks.

 

"This corn market is in a value area. I don't think we're going to take out US$3.50 before it goes off the board," said John Kleist, broker/analyst with Allendale.

 

He added that prices could run up to US$3.95 "without doing much damage," but that a rally much higher would be counterproductive and hurt demand.

 

Many traders and analysts say the market is stuck between US$3.50 and US$4. Suderman does not see it breaking out of that range unless or until the market gets a surprise in the way of planted acreage estimates.

 

The market closed a few cents below key 10-day, 20-day and 50-day moving averages.

 

Traders and analysts offered mixed views of South American weather. Suderman said the potential for rain next week could play into Friday's trade ahead of the long three-day weekend. The market is closed for the U.S. Presidents Day holiday Monday.

 

CBOT oats futures ended higher. March oats ended up 2 cents to US$1.90 1/2 per bushel and May oats climbed 1 1/2 cents to US$1.98 1/2.

 

Ethanol futures were lower. March ethanol slipped US$0.009 to US$1.593 per gallon and May ethanol ended down US$0.007 to US$1.603.