March 18, 2009

 

CBOT Corn Review on Tuesday: Down slightly; farmer selling weighs

 

 

Chicago Board of Trade corn futures ended slightly lower Tuesday, stalling the market's three-day rally as producer selling continued to weigh, analysts said.

 

May corn ended down 1 cent to US$3.90 1/2 per bushel, and July corn ended down 1 cent to US$4.00 3/4.

 

The market slipped despite a wealth of support from outside markets. Crude oil and equities were higher, as were neighboring markets wheat and soybeans.

 

Farmer selling helped slow the market's rally on Monday, and was noted again Tuesday. The recent climb in prices have prompted many producers to sell now, before planting season, traders said. Producers have been waiting to sell because of corn's precipitous drop in the second half of 2008.

 

The US$4 mark poses resistance to the market, both psychologically and because farmers appear willing to sell around that price, traders said. A close above US$4 could prompt more buy stops and send the market another leg higher, a trader said.

 

Despite the modest losses, corn closed above the 100-day moving average in the May contract for a second consecutive day, which could trigger more buying, a trader said.

 

The trade is concerned about corn planted acreage, but traders said there is little fundamentally to push the market higher. John Kleist, broker/analyst with Allendale in McHenry, Ill., said the recent climb in the financial markets do not mean that corn's demand problems have ceased.

 

"The psychology has been eased a bit, but certainly the problems have not gone away," said John Kleist, broker/analyst with Allendale in McHenry, Ill.

 

Chad Henderson, analyst with Prime Ag Consultants, said the prospects of an early spring could soon weigh on the market given the warm weather in the U.S. corn belt. He said there should be some planting in Illinois as early as the end of next week.

 

CBOT oats futures ended higher. May oats were up 4 1/2 cents to US$1.93 per bushel and July oats settled up 4 1/2 cents to US$2.02.

 

Ethanol futures were lower. May ethanol was down US$0.015 to US$1.575 per gallon and June ethanol ended up US$0.014 to US$1.610.