August 26, 2009

 

CBOT Corn Review on Tuesday: Slides on big crop, outside pressure

 

 

Chicago Board of Trade corn futures stumbled Tuesday, ending lower amid pressure from soys and bearish crop expectations, traders said.

 

September corn ended down 8 cents to US$3.21 1/2 per bushel and December corn ended down 8 3/4 cents to US$3.26 3/4.

 

Projections that the crop will be near or above the record U.S. yield of 160.4 bushels per acre this year is setting a bearish tonnee, traders said.

 

"We just don't have any weather issues, and it seems like everyone wants to keep making this crop bigger and bigger," said Chad Henderson, analyst with Prime Ag Consultants.

 

Although there is some concern about an early frost hurting the crop because it is behind schedule, traders said that as long as the forecasts remain benign, the market will remain under pressure.

 

"If I'm long corn right now, I'm nervous," a trader said. "Technically, you can make the case this thing is starting to roll over."

 

Henderson noted that the market tried by failed to climb beyond the December contract's 40-day moving average at US$3.37 1/4. It is the third time this month the price has climbed to the average but retreated.

 

"If we need a reason to push through that, it's just not there, either with demand or production or the weather," Henderson said. "The path of least resistance is to take this thing a little bit lower."

 

The market climbed initially in the session but soon retreated, and eroded further later in the day following a break in soys, a trader said. Corn also had pressure from a break in crude oil, which influences corn because of its use in ethanol.

 

Funds sold an estimated 7,000 contracts Tuesday.

 

Demand remains questionable, particularly for the feed sector and to a lesser extent with ethanol, according to analysts.

 

Farmers are remaining tight-fisted with corn however, Henderson said.

 

CBOT oats futures ended higher Tuesday. September oats ended up 3 3/4 cents to US$2.15 1/2 per bushel and December oats settled up 3 3/4 cents to US$2.29 1/2.

 

Ethanol futures were lower. September ethanol ended down US$0.017 to US$1.623 per gallon and November ethanol settled down US$0.011 to US$1.599.