April 25, 2008

 

CBOT Corn Review on Thursday: Down on speculative sales, outside markets

 

 

U.S. corn futures fell on speculative fund pressure linked to weakness in key outside markets and a stronger U.S. dollar against the world's major currencies, which led to losses in most commodities, analysts and traders said Thursday.

 

May corn on the Chicago Board of Trade lost 11 1/2 cents to end at US$5.76 1/4, July was down 12 cents at US$5.89 1/2 and new-crop December fell 10 1/2 cents to settle at US$6.02 a bushel.

 

In addition to the widespread speculative selling, traders were less concerned about the rain and cold temperatures in parts of the Midwest than they have been in recent sessions, amid reports of planting progress in areas of the eastern corn belt, said John Kleist, analyst/broker at Allendale Inc. in McHenry, Ill.

 

"Some of the fields are going great guns over here," he said.

 

The bulk of the planting delays is being seen in the western and central belt as showers passed through those areas late Wednesday into Thursday, keeping fields too soggy for planting. Rains are expected to make their way into eastern belt areas sometime Friday.

 

While there are concerns over the delayed plantings, there is still time for farmers to get the crop sown, traders and analysts said, if the wet weather pattern breaks.

 

Temperatures are expected to rebound in the second half of next week, leading to gradual planting improvements, though some rain is still probable during that period, according to private forecaster T-storm Weather.

 

Traders are also becoming nervous over widespread reports criticizing ethanol's role in higher food prices and the tightened supply situation in the market, Kleist said.

 

While the push to produce ethanol has no doubt caused dynamic shifts in acreage and market psychology, ethanol backers point to the jump to record highs in crude oil and gasoline prices for driving up transportation costs, thus lifting prices on many food items. In addition, they say the growing market for dried distillers grains, a byproduct of ethanol production, creates an extra energy source for livestock feed.

 

Technically, July pit-traded corn hit a US$5.85 3/4 session low on Thursday's decline, finding support near the US$5.84 40-day moving average. The US$5.83 low from Monday also offers near-term support, an analyst said. Nearby resistance is met at Thursday's US$6.03 session high, with additional layers resting just above at US$6.04 and US$6.06, then again at US$6.15 a bushel.

 

In other news, weekly export sales were in line with trade estimates and had little effect on prices, traders said. Sales totaled 775,300 tonnes for 2007-08 and 212,300 tonnes for the 2008-09 crop year. The bulk of the sales went to Japan, the U.S. Department of Agriculture said.

 

Mexico's 2008 corn crop is expected to increase 6.4% to 25 million metric tonnes, up from 2007 production of 23.5 million tonnes, the agriculture ministry said.

 

The head of the U.N. Food and Agricultural Organization said Thursday that US$1.7 billion should be set aside for farmers in developing countries to grow more crops in order to tackle a growing global food crisis. Jacques Diouf said those farmers need immediate access to more seed, fertilizer and animal feed for the 2008 growing season, the Associated Press reported.

 

In other markets, CBOT oat futures dodged the general commodity sell-off with a round of late buying, a floor trader said. The market earlier in the session traded both sides amid fund buying and spillover pressure from losses in the neighboring grain markets, he added. July oats rose 2 cents to US$3.87 per bushel.

 

Ethanol futures slipped. May ethanol dropped 4.4 cents to US$2.51 per gallon, and June ethanol fell 3.3 cents to US$2.45.