June 20, 2009

 

CBOT Corn Review on Friday: Slips below US$4 on pressure from soy

 

 

Chicago Board of Trade corn futures ended lower Friday, as pressure from the soy market sent prices below support at US$4.

 

July corn closed down 4 cents to US$3.99 1/4 per bushel, September corn closed down 4 1/2 cents to US$4.07 1/4 and December corn ended down 4 1/4 cents to US$4.19 1/2.

 

A couple of traders said the close below US$4 was bearish psychologically. But others said the market still has nearby support in the US$3.90s. Dave Marshall, independent broker and advisor from southern Illinois, added that the market is already oversold.

 

Soys' fall of more than 30 cents was the dominant factor in corn's weakness Friday, traders said. For the week, July corn lost 26 1/2 cents.

 

Weather is mostly seen as neutral, with ample rains and warming temperatures seen as beneficial to the crop. But on a day in which thunderstorms pounded the Chicago area, traders said the rains are starting to border on the excessive.

 

A floor analyst said flooded fields could become a concern.

 

"It could be too much of a good thing," he said.

 

Funds sold an estimated 5,000 contracts Friday.

 

The trade is already looking ahead to the June 30 acreage report from the U.S. Department of Agriculture. On Friday, Informa Economics projected that USDA will see corn acreage at 83.111 million in 2009 while soy acreage will total 78.869 million, according to traders.

 

The private analytical firm's corn acreage projection, if realized, would be down from the U.S. Department of Agriculture's March estimate of 85.0 million acres and last year's acreage of 86.0 million.

 

A CBOT floor trader said the report was bullish for corn and bearish for soys. Last month, Informa projected corn acreage at 83.9 million and soy acreage at 78.3 million.

 

The trade is mostly expecting a reduction in acreage, although some say that losses in the eastern and southern corn belt will be balanced by gains in the western corn belt.

 

Marshall said that in his area of southern Illinois, between one-quarter and one-third of the planned corn acres won't get planted.

 

CBOT oats futures inched slightly higher. July oats ended up 1/2 cent to US$2.12 per bushel and September oats ended up 1/2 cent to US$2.21 1/2. All other contracts were unchanged.

 

Ethanol futures ended lower. July ethanol was down US$0.005 to US$1.708 per gallon and September ethanol was down US$0.007 to US$1.693.