July 25, 2009

 

CBOT Corn Review on Friday: Lower amid technical selling; 7th weekly low close

 

 

Chicago Board of Trade corn futures ended lower Friday as the market's inability to extend Thursday's rally prompted profit-taking and technical selling, traders said.

 

September corn ended down 10 3/4 cents to US$3.16 1/4 per bushel and December corn ended down 11 1/2 cents to US$3.27 1/4.

 

After sharp gains Thursday on questions about U.S. planted acreage, traders were expecting more covering of short positions Friday. But the market opened lower and stayed that way throughout the day.

 

"People were disappointed that it didn't follow through," a trader said. "I think this is a technical, light-volume sell-off.

 

The slide took corn to its seventh straight weekly low close as the September contract lost 7 cents on the week.

 

Weakness in wheat futures also helped drag corn lower, said Mike Zuzolo, senior analyst with Risk Management Commodities.

 

"The December (corn) taking out its 10-day moving average a little bit ago probably brought in some profit-taking of some weak longs as well," Zuzolo said.

 

Funds sold an estimated 6,000 contracts.

 

"Traders would interpret today's activity as consolidation in a technical rally," Farm Futures analyst Arlan Suderman said in a market commentary. "Support still lies at US$3, but neither end-users nor speculators have significant incentive to chase this market higher."

 

Weather remains bearish, with more cool weather and adequate rainfall for most of the corn belt. Traders say that even with an expected reduction in corn acreage by the USDA - analysts are expecting anywhere from 250,000 to 1.5 million fewer acres - total production should be large thanks to good yields.

 

Analysts add that farmer selling could limit any upside move on the acreage questions. Producers are still holding a lot of grain and in many cases will need to unload it for cash flow reasons and to free up storage space for the new crop, analysts said.

 

CBOT oats futures ended lower. September oats ended down 7 1/2 cents to US$1.95 per bushel and December oats ended down 7 1/2 cents to US$2.07. The September contract set a new contract low Friday, and lost 20 1/4 cents on the week. A trader said the market has been pressured by corn's decline.

 

Ethanol futures were lower. August ethanol was down US$0.032 to US$1.565 per gallon and September ethanol was down US$0.049 to US$1.506.