October 28, 2009

 

CBOT Corn Review on Tuesday: Lower on dollar, harvest window

 

 

A stronger dollar and improved harvest outlook weighed on Chicago Board of Trade corn futures on Tuesday, as the market continued to retreat from its Friday high.

 

December corn ended down 7 1/4 cents to US$3.70 3/4 per bushel, and March corn ended down 7 cents to US$3.83.

 

The market was joined in its drop by wheat and soy, as a weaker U.S. dollar supported commodities generally.

 

"Right now it's all about the buck," said Jerry Gidel, analyst with North America Risk Management Services. "The buck is still king."

 

The market has fallen from a Friday intraday high of US$4.13, and technical weakness has chased more longs out of the market, analysts said.

 

Although there's no significant bearish news, there is also little impetus to push the market higher, traders say.

 

"When you've rallied US$1 in corn, you have to ask yourself how much is left, and that's where we're at now," a trader said.

 

A lot of traders and analysts said the market's recent climb had little to do with fundamentals and questioned the market's ability to sustain such prices, which could affect demand. Export sales have declined recently.

 

"If you get corn around US$3.50, there's a whole lot of demand," Gidel said. "Around US$3.75, US$4, not so much demand."

 

Adding pressure, according to some traders, is drier weather expected next week, which is fueling ideas that more harvest work will be done.

 

Still, much of the corn belt will get more rain this week, and some traders say there is still potential for more harvest delays. Even when the corn can be removed from the field, a lack of drying capacity could create a bottleneck of wet corn in some areas, analysts said.

 

Harvest progress was reported only at 20% for the week ended Sunday, up from 17% the prior week, according to the U.S. Department of Agriculture.

 

Funds sold an estimated 8,000 contracts Wednesday.

 

A trader said the market was led lower by wheat, which dropped more than 20 cents amid profit-taking and an absence of fundamental support.

 

CBOT oats futures ended lower. December oats ended down 3 1/2 cents to US$2.44 per bushel and March oats ended down 3 1/2 cents to US$2.57 1/2.

 

Ethanol futures were mixed. November ethanol ended up US$0.009 to US$1.980 per gallon, and December ethanol ended down US$0.008 to US$1.885.