June 11, 2009

 

CBOT Corn Review on Wednesday: Slips on dollar; bearish technical performance

 

 

Chicago Board of Trade corn futures fell Wednesday as a stronger dollar wiped out what traders saw as modest support from the government's supply and demand report.

 

Prices ended at or near session lows. July corn ended down 8 1/4 cents to US$4.35 3/4 per bushel, September corn ended down 8 1/2 cents to US$4.44 3/4, and December corn ended down 8 1/4 cents to US$4.58.

 

After an early push, corn was unable to hold gains on the morning's supply and demand report, which cut projected yield and 2009-10 ending stocks. The market ended lower in an outside day, which analysts said was a bad sign for bulls.

 

"I think it's more about what corn didn't do today," said Don Roose, president of U.S. Commodities. "It didn't perform."

 

The stronger dollar weighed on most commodities Wednesday. Still, a floor trader said corn's weakness was disappointing and could signal a reversal from the recent uptrend.

 

"I thought corn should have been the pillar today, and it wasn't," he said.

 

The report cut ending stocks closer to 1 billion bushels for 2009-10, and cut yield by two bushels per acre. Analysts said the estimates highlighted the tight balance sheet for new crop, but noted that the USDA's projections were well within analyst estimates. Some analysts said the yield could have been cut even further.

 

"Most of the numbers in USDA's latest update were right in line with expectations in what turned out to be a rather nondescript report event that won't have much impact on price trends in place," Darrell R. Jobman, senior analyst for traderplanet.com, said in a market commentary.

 

The estimates have already been priced into the market, analysts said.

 

"You had some (bullish) things you could have looked at, but they were old and stale," Roose said.

 

Some analysts say the market will continue to be well-supported on breaks, as concerns about the crop underpin. But Roose noted that yields ultimately improved by 4 bushels per acre from the June report last year, a scenario that he said was not unlikely again this year.

 

Traders also noted that demand could put pressure on the market. Wednesday's USDA report included a 100-million-bushel cut in feed demand.

 

CBOT oats futures ended lower. July oats ended down 4 1/2 cents to US$2.41 1/2, and December oats ended down 4 cents to US$2.65. Wednesday's supply and demand report left the balance sheet unchanged, although the USDA did increase its projected 2009-10 average farm price by 10 cents.

 

Ethanol futures were lower. July ethanol ended down US$0.007 to US$1.766 per gallon and September ethanol ended down US$0.010 to US$1.770.