May 23, 2008

 

CBOT Corn Review On Thursday: Drops on crude oil, profit-taking

 

 

Chicago Board of Trade corn futures followed crude oil prices lower Thursday, and profit-taking before the long Memorial Day weekend kept prices lower, analysts said.

 

July corn was down 11 1/2 cents to US$5.95 3/4, September corn was down 11 1/2 cents to US$6.08 1/2 and December corn was down 10 1/4 cents to US$6.32 1/4.

 

Corn prices remained tethered to crude oil, which is a huge factor across the entire economy, a trader said.

 

"How does (corn) divorce itself? Unfortunately, it can't," the trader said. "It's like trying to fight a war with a BB gun."

 

An analyst said corn is especially sensitive to the price of crude oil because of its effect on crude oil demand and because corn supplies are tight.

 

With Memorial Day weekend approaching, many traders took profits rather than worrying about unforeseen changes to the market that may await them next week, analysts said.

 

"If you're long, you don't know what lies on the other side," said Dale Durchholz, an analyst with AgriVisor.

 

Corn is also beginning to feel pressure from the price of wheat, which has fallen recently and may "put a lid on the corn market," Durchholz said. For farmers in the southern Plains in particular, corn and wheat prices are comparable.

 

"We're at a point now where it's viable to feed wheat," he said.

 

Weather, which many traders have said was neutral the past couple weeks, may have limited losses Thursday, a floor trader said. DTN Meteorlogix is calling for up to three inches of rain through the weekend in the northwestern Midwest. The rest of the Midwest should see lighter rains, up to 0.50 inches.

 

"(The weather forecast) was friendly for corn, but obviously it was outgunned by crude," a trader said.

 

CBOT oats were lower as funds continued selling July and buying December, a trader said.

 

"There's big open interest still in July, so they've got a lot to move," the trader said. July oats were down 8 cents to US$3.88 1/2 per bushel, September oats were down 8 cents to US$3.99 1/2 and December oats were down 7 1/2 cents to US$4.15.

 

Ethanol futures were lower. June ethanol was down US$0.029 to US$2.504 per gallon and July ethanol was down US$0.014 to US$2.501.