July 3, 2009

 

CBOT Corn Review on Thursday: Ends lower on crude, weather, positioning

 

 

Chicago Board of Trade corn futures closed lower Thursday as a drop in crude-oil prices and favorable crop weather forecasts hung heavily on the market.

 

July closed down 6 cents at US$3.45 3/4 per bushel and December closed down 11 3/4 cents at US$3.57 1/2, near its intraday low of US$3.57. On the week, most-active December corn has fallen 11.6%.

 

Crude-oil futures dropped Thursday and corn tracked oil's path. December corn futures dipped to a low of US$3.57 in late trading, a price last seen in early December. Weakening gold prices and strength in the U.S. dollar also vexed the corn market. "The outside markets came together and helped give us more weakness," said Kent Beadle, market analyst at Country Hedging. Corn futures opened lower and continued lower without much movement throughout the day.

 

Weather is generally favorable to crop development in the short term. A T-storm Weather forecast said temperatures across the corn belt should be seasonable and rainfall will be scattered but minimal. Longer term, T-storm Weather said a warmer to hot weather pattern could overspread the southwest two-thirds of the corn belt later next week, which could be "the second heat wave of summer." However, heat will likely last only a few days in the central and eastern belt, bringing storms as it cools. It may last longer in the southwestern region of the belt, T-storm Weather said.

 

"Weather is the primary market driver from this point forward," said Beadle. July is a critical month in corn development, as pollination occurs during this time and drought and heat can stress the crop and reduce yields.

 

Weekly export sales were supportive, but only limited losses, traders and analysts said. Net corn export sales of 1,155,100 MT for the week ended June 25 were up 68% from the previous week and up 67% from the prior four-week average, the U.S. Department of Agriculture said in its Thursday report.

 

Positioning ahead of the Independence Day weekend also hung heavy on corn, traders and analysts said. Funds sold an estimated 11,000 contracts.

 

While some analysts said the market has already digested the surprisingly bearish USDA acreage report, others said the report continues to give a bearish cast. "It's just too much corn," a floor trader said.

 

Traders said analytical firm Informa Economics released its production figures Thursday, estimating a 12.5 billion bushel corn crop, 423 million bushels above last season. Informa said it predicts corn yields at 156.3 bushels an acre. The USDA will release its first crop production report on Aug. 12.

 

In further export news, the USDA announced private export sales of 152,400 metric tonnes of corn for delivery to unknown destinations in the 2009-10 marketing year.

 

CBOT oats closed lower. July closed down 10 cents at US$2.15 1/2 a bushel and September closed down 10 1/2 cents at US$2.24 1/2.

 

Ethanol closed mixed to mostly lower. July closed up US$0.015 at US$1.670 a gallon and September closed down US$0.016 at US$1.536.