September 4, 2008

 

CBOT Corn Review on Wednesday: Prices fall on continued outside pressure

 

 

Continued pressure from outside markets amid worries about global demand pushed Chicago Board of Trade corn lower Wednesday.

 

September corn ended down 6 1/2 cents to US$5.46 1/2, December corn ended down 7 cents at US$5.62 1/4, and March corn ended down 7 cents to US$5.81.

 

Corn continues to fall in the face of general commodity weakness, led by a stronger dollar and weaker crude oil. Crude fell again Wednesday because of less-than-expected damage from Hurricane Gustav, although the market trimmed its losses later in the day.

 

Analysts say there is concern that a slowdown in the global economy will dampen demand for commodities.

 

Some traders said the market is also pressured by weather forecasts, which do not include an early first frost. The forecast also includes what some say will be beneficial rainfall from the remnants of Hurricane Gustav, although there are conflicting views about how much the rain will support the crop.

 

A trader said the rain should be supportive "as long as it doesn't wash stuff away."

 

But some analysts said the rain should have minimal effect on the corn crop at this late stage of the season.

 

"Is this rain going to do any boosting of yields?" said Jerry Gidel, analyst for North America Risk Management Services. "Boy that is real, real tough."

 

Corn trimmed its losses from early Wednesday, following crude oil as it rebounded modestly, traders said.

 

"We seem to have lost volume, and now we have short-covering in the crude market," a trader said.

 

The trader added that the market showed technical strength by failing to dip below US$5.50 in the December contract, and that wheat was also supporting corn. Corn seems to be trading in a range between US$5.50 and US$5.80, he said.

 

The trade is beginning to turn its attention to the Sept. 12 crop production report from the U.S. Department of Agriculture. The government in August projected a yield of 155 bushels per acre and total production at 12.288 billion bushels.

 

"It feels like we're trading a moderate revision lower from the last report," a trader said.

 

On Wednesday, Farm Futures released its pre-report estimates, calling for a yield of 154 bushels per acre and total production of 12.210 billion bushels.

 

The estimate follows the release of estimates from FC Stonnee that also called for yields and total production below the government's August estimate. The commodity risk management firm estimated the 2008-09 U.S. corn crop at 12.159 billion bushels, with a yield of 153.4 bushels per acre.

 

CBOT oat futures ended lower. September oats ended down 7 cents to US$3.37 per bushel, December oats ended down 8 cents to US$3.52 and March oats ended down 8 cents to US$3.69 1/2. A trader said there was fund buying supporting the market at the close.

 

Ethanol futures were lower. September ethanol ended down US$0.010 to US$2.225 per gallon and December ethanol ended down US$0.049 to US$2.201.