August 15, 2009

 

CBOT Corn Review on Friday: Lower on large crop, weaker soy, crude

 

 

Chicago Board of Trade corn futures ended lower Friday amid a bearish crop outlook and pressure from outside markets, analysts said.

 

September corn ended down 5 1/4 cents to US$3.19 1/4 per bushel and December corn ended down 4 1/4 cents to US$3.27 3/4.

 

The market is balancing what is expected to be a bearish large crop this year with the fact that, since the crop is late-developing, it remains vulnerable to an early freeze that could cut off growth before it is fully matured.

 

"Corn being down today was reflective of the path of least resistance right now," said Shawn McCambridge, senior grains analyst for Prudential Bache.

 

McCambridge said the market is currently range-bound. Still, as the crop emerges from any potential danger, "prices will continually extend the lower side of the range, and most likely new contract lows," he said.

 

A drop in crude oil prices, along with sharply lower soys, added to the pressure on corn Friday, analysts said. Some traders and analysts note that the soy-corn ratio is historically high and that a correction is likely. But a couple traders said that a correction can be accomplished by sharply lower soys, not necessarily a climb in corn.

 

McCambridge and other analysts also note that the corn-soy spread is not critical right now because it is several months before farmers will make planting decisions next year.

 

The September contract lost 2 3/4 cents on the week. Some traders say that despite gains on Wednesday following bearish crop projections from the U.S. Department of Agriculture, the USDA's report will continue to pressure the market. They say "a big crop gets bigger."

 

"In my opinion, this is what should have happened two days ago," a trader said of the market's dip.

 

Looking ahead to next week, the trade will be keeping an eye on results from the Pro Farmer Midwest Crop Tour, which begins Monday. The tour's two legs will start in Sioux Falls, S.D. and Columbus, Ohio, and will converge in southern Minnesota Thursday.

 

Analysts say the western leg of the tour should showcase strong crops, while conditions on the eastern leg could be variable.

 

CBOT oats futures ended flat. September oats ended at US$2.01 1/4 per bushel and December oats settled at US$2.15. Lightly-traded back months ended up slightly.

 

Ethanol futures were mixed. September ethanol ended down US$0.010 to US$1.555 per gallon and November ethanol ended up US$0.006 to US$1.532.