April 8, 2009

 

CBOT Corn Review on Tuesday: Drops below US$4 on crude, equities, dollar

 

 

Chicago Board of Trade corn futures fell Tuesday, dropping below US$4 on outside market pressure.

 

May corn ended down 9 1/4 cents at US$3.96 1/4 a bushel and July corn ended down 9 1/4 cents at US$4.06 1/2.

 

Weaker equities and crude oil set the tonnee, traders said. Also, the dollar was higher, which makes U.S. exports less attractive.

 

A floor trader said funds are moving money out of the markets. Funds sold an estimated 5,000 corn contracts Tuesday.

 

"You've got a (stock) market that's about to get clobbered," a trader said. "People can smell it. Nobody wants to be the last out of the pool."

 

But some analysts said corn's fundamentals are positive, and that concerns about wet U.S. corn belt weather will continue to underpin.

 

Mike Zuzolo, senior analyst for Risk Management Commodities, said that buyers are content to wait until Thursday's supply and demand report, by which time they will also know more about next week's weather. The U.S. Department of Agriculture is scheduled to release the report Thursday at 8:30 a.m. EDT.

 

Some analysts expect positioning and light profit-taking to continue ahead of the report. After the report, weather will begin to take a dominant role in the market, some analysts said.

 

"I think there's probably some pent-up buying that's getting ready to come in Thursday, ahead of the three-day weekend, after the report numbers come out, if they're not negative," Zuzolo said.

 

The market's recent trading range is high enough to consistently encourage farmer selling, which is pressure corn prices, analysts said.

 

In other news, 35 corn calendar swaps traded Monday on the first day of ag swaps trading, CME Group said. The CFTC gave regulatory approval for the swaps in March. Calendar swaps are based on the average daily settlement price for the corresponding underlying futures contract during the final month of clearing the swap.

 

CBOT oats futures ended mostly lower. May oats settled down 1 cent at US$1.99 a bushel and July oats ended down 1 cent at US$2.08 1/4. Other contracts settled unchanged.

 

Ethanol futures were lower. May ethanol was down US$0.020 at US$1.570 a gallon and June ethanol was down US$0.036 at US$1.582.