June 17, 2008

 

CBOT Corn Review on Monday: Up slightly as momentum slows

 

 

Drier weather, lower crude oil and profit-taking put the brakes on Chicago Board of Trade corn futures' record-breaking ascent Monday, as prices closed up just slightly on the day.

 

July corn closed up 3/4 cent to US$7.32 1/2 a bushel, September corn ended up 1 cent to US$7.46 3/4 and December corn settled flat at US$7.65.

 

Analysts said that although flooding across the U.S. corn belt, particularly Iowa, is supportive, the market factored in those problems during a vertical climb in the past several days. On Monday the market "paused," analysts said, as it awaited fresh weather news and the U.S. Department of Agriculture's crop progress report, which will be released Monday afternoon.

 

"The critical time for corn is July, not June," said Vic Lespinasse, analyst for Grainanalyst.com. "If the weather is favorable from here on out, we could still have a decent crop. It's not dead and buried yet."

 

Traders and analysts mostly said they expected a decline in crop condition ratings in the USDA's report, but said it was tough to estimate because there was little precedent for the type of flooding that has occurred during the past week.

 

After setting new all-time highs for several straight days, analysts said there were signs that demand rationing through higher prices was starting to have an effect. Cash prices were starting to fall, analysts said.

 

July corn climbed as high as US$7.60 in early trading and dropped as low as US$7.25 in the afternoon. Falling crude oil and fears of falling demand prompted many traders to book profits, analysts said.

 

"There's been a tremendous influx of fund-buying, and the market is just now focusing on the realization that demand is starting to curtail," said Joel Karlin, analyst for Western Milling.

 

Karlin said corn lost technical momentum after July reached US$7.50, which was a target for some traders.

 

A break in crude oil prices also pressured corn, analysts said. Crude closed slightly lower after being several dollars higher earlier in the day.

 

"I'm sure that's weighing on things a little bit," an analyst said. "But we didn't respond when it was US$4 up either."

 

CBOT oats ended lower. July oats were down 4 cents to US$4.21 per bushel, September oats were down 4 cents to US$4.33 and December oats were down 4 cents to US$4.49.

 

Ethanol futures were higher. July ethanol was up US$0.037 to US$2.836 per gallon and December was up US$0.079 to US$2.859.