May 15, 2008

 

CBOT Corn Review on Wednesday: Lower on weather, outside markets

 

 

Chicago Board of Trade corn futures ended lower Wednesday on dry weather forecasts and pressure from outside markets, traders and analysts said.

 

May corn ended down 7 3/4 cents to US$5.89 3/4 per bushel, July closed down 11 cents to US$5.96 1/4, and Dec finished 10 1/2 cents down at US$6.20 1/2 a bushel.

 

Traders and analysts said U.S. corn belt weather remains the key factor in the market as growers who are behind in their plantings look to catch up.

 

T-storm Weather is calling for a few showers in the eastern corn belt between now and Monday. Western areas of the corn belt, including much of Iowa, Minnesota and Missouri, should be dry and have good planting opportunities, according to the forecast.

 

A drop in crude oil also helped push corn lower, traders said. Traders have continued to buy soybeans and sell corn since Friday's supply and demand report from the U.S. Department of Agriculture showed higher-than-expected corn ending stocks this year, they said. The weather reports make it less likely that farmers will be forced to switch from corn to soybeans, they added.

 

Another factor in this week's drop is traders betting wrongly last week on a bullish supply and demand report, said John Kleist, a broker/analyst at Allendale in McHenry, Ill. Last week's rally proved to be a "false breakout to the high side," he said. Corn broke contract records Thursday and early Friday amid heavy trading, he noted.

 

"There were big bets being made on the report," Kleist said. "And the report didn't come out friendly."

 

A trader said on a day with little news, he was encouraged to see July corn close above its US$5.95 low from Tuesday.

 

"I don't see us crashing and burning," he said.

 

Kleist said the good news for bulls is that July corn has found support at its 50-day average around US$5.92 1/2 in recent days. A dip below that average could trigger some stop-loss selling, Kleist said.

 

CBOT oats futures were down slightly amid a continuation of this week's light trading, a trader said. Although there was some commercial buying of December oats, trading was even lighter today, he said. July oats were down 3 1/2 cents to US$4.07 1/2 per bushel, September oats were down 3 1/2 cents to US$4.18 1/2 and December oats were down 3 cents to US$4.33 1/2.

 

Ethanol futures were lower. June ethanol was down US$0.048 to US$2.491 per gallon and July was down US$0.042 to US$2.648.