February 28, 2009

 

CBOT Corn Review on Friday: Retreats on bearish economy, fundamentals

 

 

Chicago Board of Trade corn futures stumbled lower Friday, backpedaling amid bearish fundamental and outside market influences.

 

March corn ended down 11 1/4 cents at US$3.50 3/4 per bushel, and May corn ended 11 1/2 cents lower at US$3.59 per bushel.

 

"With not much in the form of fundamentally supportive news to inspire buyers, the market kept a defensive tonnee, said Shawn McCambridge, senior grains analyst with Prudential Bache in Chicago.

 

Lagging export demand and bearish outside market influences attracted speculative sellers.

 

Economic concerns kept some buyers sidelined, as "doom and gloom" outlooks for the economy tied to sliding crude oil prices and declines in equities set the tonnee from the outset, McCambridge said.

 

Demand issues remained a key fundamental barrier to upside momentum. Larger-than-expected deliveries against the March contract, reflecting weak demand, added to the weakness, with the path of least resistance lower, traders said.

 

Otherwise, traders were unwilling to take on added risk, seemingly just wanting to end the week and pick back up again on Monday, analysts added.

 

Meanwhile, U.S. Department of Agriculture's Ag Outlook Forum projections were taken with a "grain of salt," as they are more of a starting point for discussion, with the crop still weeks away from plantings, a CBOT floor trader said.

 

U.S. 2009-10 corn planted area is estimated at 86 million acres and production is seen at 12.365 billion bushels, according to USDA, which released its grains and oilseeds outlook Friday at its annual Agricultural Outlook Forum.

 

The USDA said corn yields this year are seen at 156.9 bushels per acre. Regarding demand, the government said ethanol production would grow to 4.1 billion bushels while exports are seen at 1.850 billion bushels. Ending stocks for 2008-09 are seen at 1.720 billion bushels.

 

March corn deliveries totaled 3,657 lots, with the last trade date assigned was Feb. 10.

 

CBOT oat futures closed slightly lower. March oats slipped 1/2 cent to US$1.84 1/2 a bushel, and May oats finished down 1/2 cent at US$1.94.

 

Ethanol futures sank. March ethanol closed down 3.4 cents at US$1.54 a gallon, and May ethanol dropped 2.2 cents to US$1.555.