October 31, 2009

 

CBOT Corn Review on Friday: Slumps on dollar, drier weather next week

 

 

Chicago Board of Trade corn futures ended the week on a down note Friday on tumbling equities, a stronger dollar and dry weather expected in the U.S. corn belt next week.

 

December corn ended down 13 1/2 cents at US$3.66 per bushel and March corn ended down 13 1/4 cents at US$3.79 1/4.

 

Fundamentals continue to take a back seat to outside markets. "Macro up and macro down," one trader said.

 

The market ended near its weekly low, and the December contract lost 31 3/4 cents for the week.

 

"The dollar made a sharp recovery from yesterday's losses," Ed Duggan with Top Third Ag Marketing said in a market commentary. "That coupled with the crude oil giving back yesterday's gains put pressure on the corn market today."

 

The Dow Jones Industrial Average was more than 200 points lower Friday, adding to the bearish sentiment.

 

The market also is feeling pressure from an improved outlook, although views on that are mixed. Mostly, traders are eyeing the dry weather expected starting next week and figuring that harvest progress will pick up sharply.

 

A trader said that given quality concerns about the crop and worries about price direction, farmer selling could be intense when the harvest gets into full swing.

 

Technically the market fell below trend-line support around US$3.67 in the December contract, said John Kleist, broker/analyst for Allendale.

 

"It's possible 'revenge of the bears' may be at hand," Kleist said.

 

Traders and analysts add that weak export sales are putting pressure on the market.

 

But one trader who sees the crop's fundamentals as bullish said "the rain is still around, you've still got disease around." Others point out that even with the dry weather on the way, it could be a few days before farmers are able to harvest, and that an abundance of wet corn that takes longer to dry could keep the pipeline tight.

 

In other news, The European Commission Friday approved three varieties of genetically modified corn for import and consumption in the European Union.

 

The three varieties - two developed by U.S. biotech giant Monsanto Co. (MON) and one by Pioneer Hi-Bred, a E.I. DuPont De Nemours & Co. (DD) subsidiary - were deemed safe by the European Food Safety Authority, the commission said.

 

The approvals, valid for 10 years, only cover importation and don't allow the crops to be grown in the E.U.

 

A trader said the news was supportive mostly to soymeal. There were concerns that the E.U. would ban soymeal imports from the U.S. because of traces of GMO corn found in soymeal shipments.

 

CBOT oats futures ended lower. December oats ended down 2 3/4 cents at US$2.54 1/2 per bushel and March oats ended down 3 cents at US$2.68.

 

Ethanol futures were lower. November ethanol ended down US$0.020 at US$1.935 per gallon and December ethanol settled down US$0.035 at US$1.840.