July 30, 2009

 

CBOT Corn Review on Wednesday: Ends mixed despite bearish crude

 

 

Despite bearish outside markets and a lack of fundamental support, Chicago Board of Trade corn futures shook off early losses and ended mixed Wednesday.

 

September corn ended up 1/4 cent, to US$3.20 3/4 per bushel, and December corn ended down 1 3/4 cents, to US$3.28. Other contracts were also slightly lower.

 

Corn "found support" Wednesday after early losses sent the market about five cents lower, a trader said. The market performed well given the outside pressure from a plunge in crude oil and a stronger dollar, traders and analysts said. Crude oil ended down almost US$4 - usually a bearish sign for corn, which is connected to the energy markets because of ethanol.

 

"I gave it every reason in the world to go down, when it was 4 to 5 (cents) lower I gave it every reason to stay down, and it just wouldn't do it," said Mark Schultz, senior vice president for Northstar Commodity.

 

Schultz said that in addition to the outside markets, weather remains bearish, with parts of Indiana and Ohio getting needed rain and forecasts calling for rain in Minnesota, which has been dry recently.

 

Traders and analysts note the market has already fallen sharply since the end of June, and that it should be tough to push the market further. The market is down almost US$1.50 since early June.

 

"I think corn's taken the beating that it's going to take," said Thomas Grisafi, president and CEO of Indiana Grain Company. "Its downside is limited now."

 

Some analysts note that while the crop looks good and high yields are expected, it is also behind schedule and vulnerable to an early frost.

 

Funds sold an estimated 4,000 contracts, although JPMorgan was noted buying 500 December contracts late in the session.

 

A trader said the market is settling into a sideways trading pattern which could define trade until the August 12 crop production report. He added that strong weekly export sales are expected Wednesday. The trade is expecting sales between 700,000 and 1.2 million metric tonnes. The U.S. Department of Agriculture will report the sales Thursday morning at 8:30 a.m. EDT.

 

CBOT oats futures ended lower. September oats ended down 2 1/4 cents, to US$1.91 1/4 per bushel, and December oats ended down 2 cents, to US$2.04.

 

Ethanol futures were lower. August ethanol slipped US$0.017, to US$1.593 per gallon, and September ethanol ended down US$0.007, to US$1.546.