April 28, 2009

 

CBOT Corn Review on Monday: Down as flu bug outweighs planting delays

 

 

CBOT corn futures ended lower Monday as concerns about the swine flu outbreak outweighed concerns about planting progress.

 

May corn ended down 4 3/4 at US$3.72 1/4 a bushel, July corn ended down 5 cents at US$3.80 3/4, and December corn ended down 5 1/4 cents at US$4.01 1/2.

 

The flu outbreak has raised concerns about demand, with sentiment that pork exports will suffer, resulting in lower feed usage. But the trade also was focused on soggy weekend weather and forecasts calling for more rain, analysts said.

 

"In the absence of a whole lot of other news, those are the two freight trains that collided on the track today," said Dave Marshall, an independent broker and adviser in southern Illinois.

 

Prices fell sharply initially but rebounded quickly off the lows. Funds sold an estimated 7,000 contracts.\

 

"It's enough to break us back," a floor trader said of the swine outbreak. "But a lot of people are still saying that the planting weather is friendly."

 

Darrel Good, an agricultural economist at the University of Illinois, said the depth of the demand concerns will be largely determined by the extent of the reported cases of swine flu.

 

JP Morgan said in a report that the pressure will likely be temporary, as poor South American production and the pace of U.S. planting keeps traders focused on the long term.

 

Marshall said the market's drop is likely a "short-term overreaction" and a potential buying opportunity for end-users. He noted that prices overnight rebounded near US$3.60, a point at which traders have found value the past couple weeks.

 

Planting progress remains slow, particularly in the central and eastern corn belt, analysts said. Marshall said Illinois only had a window of a day or two for planting last week, and that in weekend travels between Nashville, Ill. and Carbondale, Ill., he encountered only one farmer doing fieldwork.

 

Estimates for planting progress in this afternoon's crop progress report are mostly between 15% and 20%, although guesses have ranged from 12% to 25%. The U.S. Department of Agriculture will release the report at 4 p.m. EDT.

 

Progress was seen as especially strong in the western corn belt last week, but rains over the weekend put a halt to that, analysts said. Most of Iowa shut down on Friday due to the rain, MF Global said.

 

More rain throughout the corn belt during the next week is expected to continue hindering planting.

 

CBOT oats futures ended lower. May oats ended down 6 1/4 cents at US$1.87 a bushel and July oats ended down 6 1/4 cents at US$1.96.

 

Ethanol futures were lower. May ethanol settled down US$0.011 at US$1.559 a gallon and June ethanol ended down US$0.015 at US$1.555 a gallon.