July 29, 2009

 

CBOT Corn Review on Tuesday: Lower; late slide, weak fundamentals

 

 

A lack of fundamental support pressured Chicago Board of Trade corn futures Tuesday, as the market relinquished early gains and ended lower.

 

September corn ended down 1 3/4 cents to US$3.20 1/2 per bushel and December corn ended down 4 cents to US$3.29 3/4.

 

After dipping close to US$3 last week, the market appears to be settling into a sideways pattern, traders said. Prices were slightly higher for much of the day, extending Monday's rally on support by surging soys. The market dipped into negative territory late in the session.

 

"The weather's pretty good. They're still talking big yields. And the only reason we went higher was because of soys anyway," a trader said.

 

Cool temperatures, adequate rainfall in most of the corn belt, and forecasts calling for more of the same are helping keep a lid on the market, traders said. One trader added that cash prices have weakened for corn and soys recently, weighing on futures.

 

The trader said the market could continue to move sideways into the Aug. 12 crop production report.

 

Corn also felt pressure from a stronger dollar, traders added.

 

Despite the bearish fundamentals, some analysts point out that corn has already dropped dramatically since the beginning of June.

 

"I think we've already discounted a big crop, and now we've got to wait until we get the crop actually closer to maturity," said Sid Love, an analyst with Kropf & Love Consulting. "I don't see any excitement being short."

 

The market is expecting the Aug. 12 report to show a reduction in corn acres. But many are also expecting record yields, which could cancel out any acreage reduction.

 

Despite Tuesday's drop, the market held above its 10-day moving averages in both the September and December contracts.

 

The trade is eyeing a Commodity Futures Trading Commission hearing in Washingtonne. Potential government efforts to curb speculation in the markets is considered bearish, and weighed on both corn and wheat Tuesday, a trader said.

 

CBOT oats futures ended lower. September oats ended down 1 1/2 cents to US$1.93 1/2 per bushel and December oats ended down 1 1/2 cents to US$2.06.

 

Ethanol futures were higher. August ethanol ended up US$0.015 to US$1.610 per gallon and September ethanol ended up US$0.003 to US$1.533.