February 26, 2010

 

CBOT Corn Review on Thursday: Sags on lagging demand, outside pressure

 

 

Corn futures on the Chicago Board of Trade stumbled Thursday, backpedaling on lagging demand and outside pressure.

 

March corn ended up 3 cents or 0.80% at US$3.72 1/4 per bushel, and May corn ended 3 cents lower or 0.78% at US$3.83 1/4 per bushel. Speculative fund selling was estimated at 8,000 lots.

 

Futures came into the session overbought, and without support from outside markets, futures lacked strength to push higher, said Shawn McCambridge, senior grains analyst at Prudential Bache in Chicago.

 

The market seemingly squeezed out some nervous longs, with buyers taking cover heading toward the weekend.

 

Lower-than-expected weekly export sales provided fundamental pressure, a reflection of recent upward price movement potentially pushing the market away from end users, McCambridge said.

 

A firmer U.S. dollar for most of the session, sharp declines in crude oil futures and weakness in equities provided bearish economic pressure to damp buyer's enthusiasm as well.

 

However, the market did show some resilience in the face of bearish factors, as good underlying commercial support and uncertainty ahead of the 2010 planting season limited downside pressure.

 

The potential for a tighter corn supply and demand balance sheet when the U.S. Department of Agriculture releases its revised 2009-10 production forecast in March provided psychological support prices as well, traders said.

 

Weekly U.S. corn export sales were weaker than expected at 451,300 tonnes. Analysts had expected sales of 500,000 to 900,000 tonnes. Net sales of 401,300 tonnes for delivery in 2009-10 were down 59% from the previous week and 55% from the prior four-week average, according to the USDA.

 

Friday is first notice day for March futures. Deliveries against CBOT March corn futures are expected to be 500 to 2,000 contracts amid large registrations and chatter about quality problems with the crop.

 

CBOT oat futures ended lower. March oats dropped 2 1/4 cents, or 1.01%, to US$2.19 3/4 a bushel, and May oats finished 1 cent lower, or 0.43%, at US$2.29 1/2.

 

Ethanol futures ended lower. March ethanol finished US$0.008 lower, or 0.47%, at US$1.705 per gallon, and April ethanol ended US$0.011 lower, or 0.64%, at US$1.708.