March 6, 2009

 

CBOT Corn Review on Thursday: Drops linked to gloomy outside direction

 

 

Chicago Board of Trade corn futures posted single-digit losses in a lackluster trade Thursday.

 

March corn shed 6 cents at US$3.49 1/4. The most actively traded May corn contract lost 5 cents to US$3.58 1/2. The contract traded a 5 1/2-cent range, topping at US$3.61. July corn dropped 5 cents to US$3.67 3/4.

 

Speculative funds sold an estimated 3,000 CBOT corn contracts, according to estimates.

 

The agricultural markets were under pressure across the board as negative equities and crude oil losses were the main determinant of trader sentiment. But losses were somewhat limited by a better-than-expected export sales report for corn, said Doane Agricultural Services in a market commentary.

 

Corn export sales totaled 791,900 metric tonnes for the week ending Feb. 26, according to figures released Thursday by the U.S. Department of Agriculture.

 

Analysts expected sales in the 350,000-800,000 range.

 

"It's still pretty hard to escape the yoke of the macro markets," said Greg Wagner, senior commodity analyst. "I think we can look for more potential consolidation as we head into the last day of the trading week."

 

Given the degree of gloom characterizing outside markets, corn has made a "valiant" effort to remain in its current range, Wagner said, noting that the May contract is down just 1/2 cent for the week.

 

"Until we put a low in the stock market, the whole ag commodities market will remain under pressure," a CBOT floor trader says. "We can't get a day of follow through to the upside." But, he notes, "seasonally, this is the wrong time to push shorts. Usually prices tend to work up as we move into planting."

 

Wagner also said he sees upside potential heading into planting season.

 

"Overall the spreads have held together very well," Wagner said.

 

"We're starting to get to time frame where the trade is looking ahead and it's iffy if we're gonna get enough acreage for corn," he said.

 

Wagner also said he sees "a substantive and important change" to discussions about the government-mandated ethanol blend.

 

"It's meaningful when it starts to become a question not of if, but by how much," he said, suggesting that greater corn demand for ethanol would also support a market facing a probable drop in corn plantings.

 

In other markets, CBOT May oat futures closed down 4 1/4 cents at US$1.83 1/2 a bushel.

 

Ethanol futures lost US$0.021 cents to US$1.519 in the May contract. March ethanol was untraded.