May 14, 2009

 

CBOT Corn Review on Wednesday: Down slightly as trade consolidates

 

 

Chicago Board of Trade corn futures ended slightly lower Wednesday amid consolidation and pressure from equities, traders said.

 

May corn ended flat at US$4.19 1/2 per bushel, July corn ended down 1 cent at US$4.26 1/2, and December corn settled down 3/4 cent at US$4.47 1/4.

 

Planting concerns that pushed the market higher on the open were tempered by forecasts calling for drier weather starting next week. The market eroded throughout the day and traded lower late before climbing back close to unchanged.

 

Traders said the market was consolidating after gains Tuesday, and that the consolidation would likely continue until there was more clarity about next week's forecast.

 

The eastern corn belt is far behind normal planting pace, and more rain Wednesday and later this week will need to be followed by several days of dry weather if soils are going to dry enough to let farmers back into the fields in Illinois and Indiana, analysts said.

 

Prime Ag Consultants analyst Chad Henderson said the market's gains during the past 10 days haven't been very impressive given that there have been more planting delays and a bullish supply and demand report in the meantime.

 

"I think a lot of the bullishness over weather is already priced into the market," Henderson said.

 

But some analysts said the planting concerns were heightened by Tuesday's supply and demand report, which projected 2009-10 carryout falling to 1.145 billion bushels.

 

John Kleist, broker/analyst for Allendale, said that carryout estimate in itself is not bullish, but that the trade is treating it as such because many are expecting crop production to drop further, which would send the carryout lower.

 

Farmer selling has helped limit corn's upside movement in the past couple of days, traders and analysts said.

 

"It's clear that funds are adding to their longs, but commercials and farmers are giving them all they want," a trader said.

 

For end-users looking to buy, prices around US$4.50 are prompting "sticker shock," Henderson said. He added that December corn failed to hold US$4.50 after climbing above it in overnight trade, and that both wheat and soybeans failed at key resistance levels Wednesday.

 

CBOT oats futures ended lower. July oats ended down 7 cents at US$2.28 1/2 per bushel and Dec oats ended down 6 1/2 cents at US$2.49 1/2. A trader said the market had seen "tremendous" cash movement Tuesday, but that as a result end-users might have met their needs for the summer.

 

Ethanol futures were virtually unchanged. June ethanol was down US$0.001 at US$1.720 per gallon and July ethanol ended flat at US$1.725.