May 6, 2009

 

CBOT Corn Review on Tuesday: Mixed; good planting weather weighs

 

 

Chicago Board of Trade corn futures ended mixed Tuesday, with most contracts lower amid favorable planting weather and concern about the government's support for corn-based ethanol, traders said.

 

Nearby May corn, which is in delivery, ended up 1/2 cent to US$3.98 1/2, but all other contract months were slightly lower. July corn was down 1/4 cent to US$4.05 1/4, and December corn was down 1/2 cent to US$4.25.

 

Traders and analysts said the market was lacking any clear impetus. Prices were lower throughout the day but rebounded late. July, the most active month, dipped below its 100-day moving average in early trade but snapped back higher.

 

Despite the slow pace of planting progress, traders noted that farmers appear to be in the midst of a good window of opportunity for planting.

 

"The take-home is that the (rain) over the last 24 hours was less than anticipated, and as we look out for the next week to 10 days it does not look as wet as it did yesterday," said Rich Feltes, director of research for MF Global.

 

Some traders and analysts were keyed in on a press conference by the Environmental Protection Agency announcing a new alternative fuel standard that will likely prohibit some corn ethanol production processes based on their greenhouse-gas emissions.

 

The new standard encourages other biofuels. Chad Henderson, analyst with Prime Ag Consultants, said comments from the EPA administrator calling corn ethanol a "bridge" to the next generation of biofuels was a troubling sign for future corn ethanol demand. Analysts said the effect of the EPA's stance on ethanol demand would be long term, rather than short term.

 

Traders had expected the market to open slightly higher following Monday's crop progress report, which showed planting behind schedule, particularly in the eastern corn belt. Instead, prices fell at the open.

 

"There's a very good chance this corn crop will be in the ground by the 20th of May," Henderson said. "Well, how bullish is that at US$4.30 in corn?"

 

Analysts added that demand, particularly for feed, is relatively weak. The pork industry is suffering greatly because of the combination of the swine-flu outbreak, which has sent prices plunging, and a recent climb in corn prices.

 

"We just don't have the end-users who are making money on US$4-and-above cash corn," Henderson said.

 

CBOT oats futures ended higher. July oats ended up 3 1/4 cents to US$2.04 1/4 per bushel, and September oats settled up 2 3/4 cents to US$2.12 3/4.

 

Ethanol futures were higher. June ethanol ended up US$0.006 to US$1.631 per gallon, and July ethanol ended up US$0.013 to US$1.638.