March 12, 2010

 

CBOT Corn Review on Thursday: Ends mixed; large supplies weigh

 

 

Chicago Board of Trade corn ended mixed Thursday, as the market clawed its way back after trading lower all day due to bearish fundamentals.

 

March corn ended flat at US$3.55 1/2 per bushel, and May corn ended down 1/4 cent to US$3.65 1/4. Some deferred contracts climbed slightly.

 

The market continued to face pressure from Wednesday's supply and demand report, which cut exports and increased projected 2009-10 ending stocks.

 

The large supplies should "put the kibosh on the hopes for a meaningful spring rally," said John Kleist, broker/analyst with Allendale in McHenry, Ill. About the only bullish thing in the market, said Joel Karlin, analyst for Western Milling, are "jitters" that farmers won't increase corn acreage this year by the 3 million to 4 million acres needed to keep ending stocks comfortable.

 

But Kleist said planting delays and acreage concerns leading to a smaller crop won't be a big factor in light of the report.

 

Traders said limiting the losses Thursday was a correction in the corn-soy spread, as soy, which climbed Wednesday, plummeted Thursday.

 

Kleist said it's tough to envision anything sparking a rally in corn, but that commercial buying could limit the downside. He said commercial fund-buying might account for the fact that funds were even on the day.

 

Technically, the market is seen as bearish. Kleist said traders should start talking about US$3 corn as a more likely target than US$4 corn.

 

But analysts also noted that the market held above the February low of US$3.59 in the May contract. A trader said breaks in the market have at times been met by short-covering.

 

The demand outlook for corn is not improving. Weekly export sales were well below last week's total and analyst expectations.

 

CBOT oats ended lower. March oats ended down 1 1/2 cents to US$2.11 1/2 per bushel, and May oats closed down 1 1/2 cents to US$2.16 1/2.

 

Ethanol futures were lower. April ethanol closed down US$0.011 to US$1.604 per gallon, and May ethanol settled down US$0.015 to US$1.613.