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March 5, 2010

 

CBOT Corn Review on Thursday: Dragged lower by wheat, soy, dollar

 

 

A slump in soy and wheat prices, triggered in part by poor export demand, sent Chicago Board of Trade corn futures lower Thursday.

 

March corn ended down 3 3/4 cents to US$3.72 per bushel, and May corn closed down 3 3/4 cents to US$3.83.

 

The market gave back some of its gains from Wednesday as it has been unable to climb above the 50-day moving average, or fill in gaps on technical charts dating back to a bearish Jan. 12 crop estimate from the U.S. Department of Agriculture.

 

A stronger dollar set the tonnee for commodities, and corn was led to the downside by wheat and soy.

 

"It's going to be tough for corn to hold together or rally when you put together double-digit losses over in the soy and wheat pits," said Chad Henderson, analyst with Prime Ag Consultants.

 

The weakness in the neighboring markets was due in part to poor weekly export sales Thursday, particularly in wheat. Export sales for corn topped expectations, but were not spectacular, traders said.

 

Mike Zuzolo, president of Global Commodity Analytics and Consulting, added that wheat and soy losses might have been greater because they had more fund length. Traders had expected funds to add more long positions to start the month, but so far that has not materialized, Zuzolo noted.

 

Underpinning the market, analysts say, are concerns about spring planting, as the Midwest needs to melt away a large snowpack before soils can dry and farmers can think about getting into the fields. Such delays could ultimately hurt yields, they say, or prompt some farmers to plant soy instead of corn.

 

Henderson added there is uncertainty about whether the Department of Agriculture will cut its estimate of the 2009 corn crop on Wednesday, when it releases new supply and demand estimates. Many in the trade are expecting a reduction, which would be supportive, although private analytical firm Informa Economics said in a Thursday report that a slight increase was likely.

 

In other news Thursday, Informa upped its projected production for both corn and soy in Argentina, traders said.

 

The private analytical firm pegged the Argentine corn crop at 21 million metric tonnes, up 2.8 million from the previous month's estimate. The firm also upped projected corn output in South Africa, to 13.5 million metric tonnes, up 2 million from the prior month.

 

Traders said the estimates were bearish.

 

CBOT oats futures ended lower. March oats ended down 2 3/4 cents to US$2.19 per bushel and May oats closed down 3 3/4 cents to US$2.26 1/2.

 

Ethanol futures fell sharply Thursday. April ethanol closed down US$0.057 to US$1.604 per gallon and May ethanol settled down US$0.057 to US$1.622. 
   

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