October 24, 2009

 

 

Chicago Board of Trade corn futures retreated Friday, ending lower after early gains and closing below US$4 despite concerns about the delayed harvest.

 

December corn ended down 5 3/4 cents to US$3.97 3/4 per bushel and March corn ended down 5 1/2 cents to US$4.09 1/4.

 

John Kleist, a broker/analyst for Allendale, called the action a "mini-reversal" and said the market's climb in early trade was "irresistible to cash sellers."

 

He and others question whether the market's fundamentals support current high prices.

 

"At US$4, the demand equation changes quickly with a 13 billion bushel crop," he said.

 

That impact on demand might have been seen in Thursday's low weekly export sales total from the U.S. Department of Agriculture, some analysts said.

 

Friday's dip came a day after the nearby contract closed above US$4 for the first time since June.

 

"I wouldn't say it was negative for one day," said Mike Zuzolo, president of Global Commodity Analytics and Consulting. "The real test will be when we come back next week."

 

At the point, the market will have to deal with updated harvest progress numbers from the U.S. Department of Agriculture on Monday afternoon. It could also run into support around the 200-day moving average of US$2.89 1/2, Zuzolo said.

 

The market's early strength was attributed to soggy weather across the U.S. corn belt, as Chicago and other areas dealt with rain for more than 24 hours. Forecasts call for more wet conditions next week, although one trader said there might be some pockets in which farmers can make some progress.

 

Profit-taking and outside pressure from the dollar, crude oil and equities were seen weighing later in the day.

 

Kleist added that the run-up in corn prices might have left it vulnerable to competition from feed wheat.

 

CBOT oats futures slumped Friday. December oats ended down 14 cents to US$2.50 1/4 per bushel and March oats ended down 13 1/2 cents to US$2.63 3/4.

 

Ethanol futures were mixed. November ethanol ended down US$0.003 to US$1.985 per gallon and December ethanol settled up US$0.014 to US$1.934.