April 16, 2009

 

CBOT Corn Review on Wednesday: Ends lower on planting weather, demand

 

 

Chicago Board of Trade corn futures ended lower Wednesday, with weak demand and an easing of planting concerns weighing on the market, traders said.

 

May corn ended down 9 3/4 cents to US$3.84 1/2 and July corn ended down 9 1/2 cents to US$3.94.

 

The market is under pressure from weak ethanol and feed demand, analysts said.

 

John Kleist, broker/analyst for Allendale, says there is growing concern about ethanol's future, and the level of support it has from the government.

 

Kleist noted that the Environmental Protection Agency is considering including the impact of clearing land for corn production in its analysis of greenhouse gas emissions, which would potentially eliminate ethanol's role in meeting federal biofuel targets. He also noted that the state of California is considering a new low-carbon fuel standard that would ban ethanol.

 

"Not everyone's wholly behind corn ethanol," he said.

 

Although crude oil was only slightly lower, a trader said that an 18-year-high in crude oil stocks was a bad sign for corn, which relies on ethanol demand.

 

Early planting is behind schedule, but weather is nonetheless improving and should allow for more planting during the next couple weeks, traders said.

 

"Being mixed, it means that something is getting done," Kleist said. "It may not be ideal conditions, but it's enough to get it in the ground."

 

The market remains rangebound and has been unable to climb past US$4, traders noted.

 

"As long the weather cooperates and demand stays on the weak side, there's going to be an eye out for hedging on every rally opportunity," Kleist says.

 

A trader said there appeared to be no strong reason for Tuesday's gains and "certainly no reason for it to be down 10 cents today." Funds sold an estimated 5,000 contracts.

 

The market dipped and closed below its 20-day and 100-day moving averages on the day.

 

CBOT oats futures ended lower. May oats ended down 2 cents to US$1.90 per bushel and July oats ended down 2 cents to US$1.99.

 

Ethanol futures ended lower. May ethanol settled down US$0.012 to US$1.557 per gallon and June ethanol settled down US$0.009 to US$1.573.