July 11, 2009

 

CBOT Corn Review on Friday: Lower on optimistic crop outlook

 

 

Chicago Board of Trade corn futures ended mostly lower Friday as an optimistic crop outlook continues to weigh on the market.

 

September corn was down 1 1/4 cents to US$3.28 1/4 per bushel, and December corn ended down 2 cents to US$3.38. The July contract, which is in delivery, climbed 2 cents to US$3.45 1/2.

 

Traders and analysts say there is no good news for bulls in the market, which lost 19 1/2 cents in the December contract on the week.

 

Friday's supply and demand report from the U.S. Department of Agriculture included no surprises, but it nonetheless underscored that comfortable supplies are expected through 2009-10.

 

"This market is going to fall back to whether we have a weather story," a trader said. "And we don't right now."

 

Analysts said that some areas have experienced more dryness recently, but not enough to pose problems. Parts of the western corn belt received solid rains this week, added Joel Karlin, analyst for Western Milling.

 

The crop is starting to enter its crucial pollination period, and with no weather threats on the horizon the U.S. crop could take a run at record yields, Karlin said.

 

"If decent growing weather continues and above normal crop conditions prevail, then obviously this 153.4 bushel-per-acre yield is quite a bit low," Karlin said.

 

He added that seasonally, "this market usually continues to fall almost until right before the August crop report."

 

Analysts also discounted the notion that weaker prices would begin to stimulate more demand, as problems remain with both the ethanol and feed sectors. The gloomy outlook for the economy could limit demand, they said.

 

Funds sold an estimated 5,000 contracts Friday.

 

The December contract set a new low at US$3.28 1/2 in early trade before rebounding. On a continuation chart, the September contract hit the market's lowest price since the bear market low of US$3.06 on Dec. 6.

 

CBOT oats futures ended slightly higher. September oats ended up 1/2 cent to US$2.12 per bushel and December oats ended up 1/2 cent to US$2.24. Friday's USDA supply and demand report increased projected ending stocks for both old and new crops, and increased production slightly.

 

Ethanol futures ended lower. September ethanol closed down US$0.015 to US$1.463 per gallon and December ethanol ended down US$0.017 to US$1.455.