October 22, 2010
CBOT corn drops on poor export sales and rising dollar
US corn futures fell Thursday (Oct 21), retreating on an export report that signaled that a recent price rally was curbing demand, and on strength in the US dollar.
CBOT December corn ended US$0.09 one-quarter lower, or 1.6% lower, at US$5.64 one-quarter a bushel. Speculative fund selling was estimated at 11,000 lots.
"The export sales report was a reminder that end-users are price sensitive," said an agricultural analyst.
The impact of the surge in corn prices after the October 8 crop report was reflected in corn export sales of 212,500 tonnes, falling short of analysts' forecasts for 650,000 to 950,000 tonnes.
Weekly corn sales for delivery in the 2010-11 marketing year, which runs through August 31, were down 77% from the previous week, and 72% from the prior four-week average, according to the USDA. The top buyer was Japan at 144,900 tonnes.
The declines were a reversal from Wednesday (Oct 20) trading when weakness in the US dollar pushed corn prices up 5%. The dollar stabilized Thursday (Oct 21), lowering expectations that currency weakness would attract additional export demand.
The bounce in the dollar produced general weakness across a range of commodities, including crude oil, which slipped 2% during grain futures trading. A firmer dollar makes US commodities more expensive for foreign buyers and reduces demand.
"Looking ahead, traders are expected to take a cautious approach, as a lot of volatility has developed in corn, with prices not really going anywhere," the analyst said.
The December contract ended at US$5.64 one-quarter, up US$0.01 one-quarter for the week. Futures are poised to hover within a US$0.50 trading range until the November 9 crop report unless new fundamental news emerges, the analyst said.
The market remains underpinned by expectations that the USDA will further trim US output and supply forecasts in the November crop report.
