July 7, 2009

 

CBOT Corn Review on Monday: Pressured by outside markets, bearish weather

 

 

Chicago Board of Trade corn futures closed lower Monday as broad-based commodities liquidation weighed on prices.

 

July futures closed down 2 1/2 cents at US$3.43 1/4 a bushel and December closed down 13 1/4 cents at US$3.44 1/4.

 

The market opened weaker, but July remained near flat throughout the day, sometimes climbing into higher territory. The December contract scraped a fresh low of US$3.46 1/2 a bushel last seen for that contract in January 2007 before paring losses slightly.

 

The day's two "major influences" were outside markets and favorable weather.

 

"Big sell signals from sharp losses in crude oil and the stronger U.S. dollar" weighed heavily on corn, said Vic Lespinasse, a floor analyst with GrainAnalyst.com.

 

The weakness in outside markets such as gold and equities, along with crude oil weakness - helped general commodity liquidation to continue Thursday's action before the Independence Day weekend, said John Kleist, broker/analyst at Allendale.

 

Funds sold an estimated 12,000 contracts.

 

"That ship [market direction] is still on a southern course," he said. "It hasn't run its course quite yet," he added, indicating that corn futures could continue to slide.

 

Still, analysts said July has less liquidation pressure because the contract is in expiration and thinly traded.

 

July's minor losses compared to December are also a factor of lower prices stimulating demand, analysts said, pointing to Thursday's bullish export sales numbers.

 

"Every time we've gotten to this [price] level we've generated a lot of demand," said Arlan Suderman, a Farm Futures analyst.

 

But December continued losses throughout the day, weighed down further by bearish weather reports. A T-storm Weather forecast said the southwest half of the corn belt will become hot later this week into the weekend, but heat will help thunderstorms focus on the northern region, where corn has been drier. By next week, heat should shift further south and west, allowing areas of the corn belt to receive thunderstorms, T-storm Weather said.

 

The U.S. Department of Agriculture announced 31.1 million bushels of corn were inspected for export in the week ended July 2. The USDA is scheduled to issue an update on crop progress at 4 p.m. EDT in its weekly report. As of June 28, 72% of the U.S. corn crop was rated in good or excellent condition.

 

Argentina exported 1,181,681 metric tonnes of corn in May, down from 2,288,041 tonnes shipped a year earlier, according to the latest data from the animal health and sanitation service, Senasa. May's corn shipments were valued at US$190 million compared with US$503 million last year.