August 5, 2009

 

CBOT Corn Review on Tuesday: Ends down; two-sided trade, consolidation

 

 

Chicago Board of Trade corn futures ended lower Tuesday amid consolidation in a modest correction from Monday's sharp gains.

 

September corn ended down 3 1/2 cents to US$3.54 1/2 per bushel and December corn ended down 3 1/4 cents to US$3.65 3/4.

 

The market had an up-and-down session and followed crude oil, which ended slightly lower, an analyst said. Traders said profit-taking after Monday's sharp climb was inevitable, and that consolidation could continue into the Aug. 12 crop production report from the U.S. Department of Agriculture.

 

Ed Duggan, director of operations for Top Third Ag Marketing, said the market could make a run at the US$3.90 area in the December contract "as long as we stay over that gap opening we had yesterday." That gap on the December corn chart is at US$3.60 1/2.

 

But others think that the market will be hard-pressed to sustain gains above US$3.75 unless the weather turns bullish. As of now, the fundamentals do not justify further rallies, a trader said.

 

"You've got the 50-day moving average up at US$3.90, but I don't think you're going to get there," the trader said.

 

Producer selling was also seen pressuring the market Tuesday. Farmers are holding large amounts of grain after declining to sell during the market's early-summer swoon, and may take the opportunity on the recent rally to unload grain, some analysts said.

 

Views of the weather are mixed. The trade is eyeing forecasts for increased heat in the U.S. corn belt, but many traders and analysts say that unless heat and dryness persist for an extended period, that the crop will not be significantly hurt.

 

"I think this heat we're going to get over the weekend, if anything it's bearish, because it's going to allow us to catch up a little bit here," Duggan said.

 

CBOT oats futures ended mostly lower in a very tight trading range. September oats ended flat at US$2.11 per bushel and December oats ended down 1/4 cent to US$2.25.

 

Ethanol futures were lower. August ethanol ended down US$0.012 to US$1.658 per gallon and September ethanol ended down US$0.015 to US$1.636.