March 10, 2010

 

CBOT Corn Review on Tuesday: Lower on dollar, pre-report positioning

 

 

Outside market pressure and positioning ahead of Wednesday's government supply and demand report sent Chicago Board of Trade corn futures lower Tuesday.

 

The market opened lower and stayed that way throughout the session. March corn ended down 5 3/4 cents to US$3.58 3/4 per bushel and May corn ended down 6 cents to US$3.69.

 

A stronger dollar and weaker crude oil set the tonnee, analysts said.

 

Traders are awaiting Wednesday's supply and demand report from the U.S. Department of Agriculture. The USDA is also expected to revise the estimated size of the 2009 crop.

 

Some traders said there are expectations of a bearish supply and demand report Wednesday, even as many are expecting the size of the 2009 crop to be cut. Few are expecting a bullish report.

 

"Given the recent harvest reports, our bias is for production to remain unchanged, likely bearish for prices" Morgan Stanley analyst Hussein Allidina said in a note.

 

A Dow Jones Newswires survey found that analysts generally expect reduced 2009 production to be offset by weaker demand.

 

PFG Best analyst Tim Hannagan said the report will have little impact, and that the March 31 planting intentions report is "four times more important" than Wednesday's report.

 

"Unless there is a surprise outside the average and range of industry expectations, we look to come in Thursday, the day after, and say 'what report?'" Hannagan said.

 

The market is generally seen in a weak position technically, although one trader said there are buyers underneath the market. He added that some technical traders see the recent slump as merely a correction amid an ongoing uptrend.

 

"Every time you break, you hold," said the bearish trader, who has been frustrated by the market's refusal to break even lower.

 

CBOT oats futures ended lower Tuesday. March oats closed up 2 1/2 cents to US$2.18 per bushel and May oats settled up 2 1/2 cents to US$2.25.

 

Ethanol futures were lower. April ethanol closed down US$0.019 to US$1.615 per gallon and May ethanol settled down US$0.020 to US$1.631.