June 26, 2009

 

CBOT Corn Review on Thursday: Ends down on fund selling, favorable weather

 

 

Chicago Board of Trade corn futures closed lower Thursday on additional liquidation as the market prepares for next week's acreage report.

 

July corn closed down 4 cents at US$3.82 1/2 per bushel, and December closed down 5 3/4 cents at US$4.01 1/2.

 

The market opened slightly lower and remained range-bound through the day, then eroded near the close, with prices ending near the lower end of the day's range.

 

Analysts and traders said favorable crop weather is a key bearish influence. Warm to hot weather is forecast to continue throughout the corn belt mixed with occasional thunderstorms until cooler temperatures set in Sunday, said a T-storm Weather forecast. A trader said the heat isn't a concern right now because of forecasts calling for cooler temperatures next week.

 

Traders and analysts also said weekly net export sales were solid but neutral, as the total 936,700 metric tonnes fell in line with expectations.

 

Outside markets may have helped keep prices range-bound. Crude oil was higher, which supported ethanol prices and, indirectly, corn prices, analysts said. Equities also posted strong gains.

 

"The macro picture is a little positive, but it's tough to get too excited with the weather as good as it is," a floor trader said.

 

But John Kleist, broker/analyst with Allendale, said outside markets may have only helped "on the fringes," as corn was bogged down by long liquidation. Funds sold an estimated 6,000 contracts.

 

"The market is suffering by its own weight," Kleist said.

 

Mike Zuzolo, senior analyst with Risk Management Commodities, said the market has found support before options expiration on Friday and the U.S. Department of Agriculture acreage report Tuesday. Short-covering through the week's end is possible before the acreage report, an analyst said.

 

According to a Dow Jones Newswires survey of 18 analysts, the USDA's acreage forecast is expected to be 84.158 million acres, a decrease from the USDA's March forecast of 84.986 million acres.

 

While Jim Riley, Linn Group analyst, said in a market commentary that trade sentiment is for acreage to drop, but it's possible the USDA won't make a major reduction or it may even leave the total unchanged.

 

"If that happens, it would be considered bearish, but corn has already broke over 15% from the highs," Riley said.

 

A Dow Jones Newswires survey of 15 analysts showed expectations on average for the USDA to peg grain stocks as of June 1 at 4.190 billion bushels.

 

CBOT oats ended lower. July oats were down 3 cents at US$2.03 per bushel, and September closed down 2 3/4 cents at US$2.12 1/2.

 

Ethanol futures ended mostly lower. July ethanol closed down US$0.008 at US$1.669 per gallon, and December closed down US$0.005 cents at US$1.640.