May 16, 2009

 

CBOT Corn Review on Friday: Stumbles as trade eyes drier weather

 

 

Chicago Board of Trade corn futures stumbled Friday, ending at session lows amid strong outside markets and overbought conditions, analysts said.

 

July corn ended down 11 cents to US$4.17 1/4 per bushel and December corn ended down 10 3/4 cents to US$4.38 1/2.

 

The July contract lost 3 3/4 cents on the week, despite a healthy dose of supportive news: The eastern corn belt was drenched with rain, Tuesday's supply and demand report included a bullish cut to 2009-10 ending stocks, and weekly export sales were strong.

 

"I think that shows the market is a little tired up here," said Joel Karlin, analyst for Western Milling. "It's a little overbought."

 

The market opened flat and then trended lower throughout the day, selling into the close. A drop in crude oil and a stronger dollar weighed, traders said, as did weaker soybeans.

 

"Everything's a momentum trade now; it's all or nothing," a trader said. "Fundamentally nothing changed today."

 

Parts of already-saturated Illinois and Indiana were seeing more rain Friday, but the trade was focused more on the weather for next week, which forecasters said would be drier.

 

Traders and analysts note that farmers can plant a lot of corn in a short period of time thanks to modern technology, and that as long as the crop is planted by the end of the month, strong yields are still possible.

 

But Illinois and Indiana are far behind in planting, and agronomists say the soils need a full week of drying before the soil is good for planting.

 

"Unfortunately, for a lot of places east of the Mississippi, you're not going to be able to have planters working until a week from today - and that may be when the next rain system shows up," Karlin said.

 

Prices above US$4 have triggered farmer selling, and also raised concerns about whether corn has become too pricey for end-users.

 

"I think everyone's worried about the demand side, and that's what's holding down this market," a trader said.

 

The market dipped back below its 200-day moving average on a continuation chart.

 

CBOT oats futures settled unchanged. July oats ended at US$2.28 per bushel and December oats closed at US$2.49.

 

Ethanol futures were mixed. June ethanol ended down US$0.008 to US$1.670 per gallon and July ethanol ended up US$0.002 to US$1.695.