August 1, 2008

 

CBOT Corn Review on Thursday: Falls on weather, crude, liquidation

 

 

Chicago Board of Trade corn futures closed markedly lower Thursday on an increasingly benign weather forecast, slipping crude-oil prices and a last-minute surge of month-end liquidation, traders and analysts said.

 

September corn closed down 14 cents to US$5.87 1/2 per bushel, December corn closed down 13 3/4 cents to US$6.07 1/2 and March corn closed down 13 3/4 cents to US$6.27 1/2.

 

Thursday ended a streak of five straight higher closes as corn followed crude-oil prices down, traders and analysts said. In contrast, crude-oil prices buoyed corn prices Wednesday and helped them settle markedly higher.

 

Coupled with a general lack of fresh fundamentals, crude oil's break was a core component in corn's slip, analysts said.

 

Another was an increasingly benign weather forecast. Analysts said that above-average heat and humidity across the U.S. corn belt, seen as potentially threatening earlier in the week, could prove somewhat beneficial to the crop.

 

"Despite all the trepidation about the heat moving in, the temperatures aren't that extreme, and it's not that long lasting," said Joel Karlin, sales manager and commodity-sales coordinator at Western Milling. "For some areas that are a little bit behind, an increase in the heating-degree days is probably a little bit welcomed."

 

Accompanying humidity could also prove beneficial to the crop, said Shawn McCambridge, senior grains analyst at Prudential-Bache. These are "pretty much ideal conditions for the corn crop at this point," he said.

 

Prices were down all day and dropped even further late in trading due to month-end liquidation, traders said.

 

Other factors leading to corn's decline was a lackluster export-sales report and a general cool-down in end-user buying caused by recent gains in the market, traders and analysts said.

 

"Export sales have definitely slowed compared to where they were earlier in the year because of the prices," said Karlin, stressing the still historically high price of corn.

 

Export sales were reported Thursday at 888,900 metric tonnes for the 2007-08 and 2008-09 marketing years, at the high end of analyst estimates.

 

Recent gains in the market are also tempering a potential rally, traders and analysts said.

 

"There's not much of a new reason for buyers to step in off of the sidelines at this point," said McCambridge.

 

CBOT oats futures ended lower. A trader said the market was pressured by fund liquidation, while commercial buying provided some support to 2009 contracts. September oats were down 7 1/2 cents to US$3.77 1/2, December oats were down 7 1/2 cents to US$3.97 and March oats were down 7 cents to US$4.16 1/2.

 

Ethanol futures were slightly lower. September ethanol ended down US$0.004 to US$2.446 per gallon and December ethanol ended down US$0.020 to US$2.430.