November 5, 2009

 

CBOT Corn Review on Wednesday: Rally ends; bearish crop projections weigh

 

 

Chicago Board of Trade corn futures ended lower Wednesday as funds ended their recent shopping spree and bearish crop projections weighed.

 

December corn ended down 6 cents to US$3.84 per bushel, and March corn ended down 6 cents to US$3.97 1/2.

 

The retreat comes after two days of gains fueled by fund-buying and technical momentum. Funds sold an estimated 6,000 contracts on Wednesday.

 

Traders and analysts said that projections from private analytical firm Informa Economics, released during Wednesday's trade, pressured the market. Informa estimated the corn crop at 13.064 billion bushels, with an average yield of 164.8 bushels per acre, traders said.

 

Although lower than the estimates last month, the projections were higher than the U.S. Department of Agriculture's October estimates. Traders said the market's retreat in early trade following initial gains may have stemmed from traders trying to get a head start on the report.

 

Analysts added that FC Stonnenee is expected to release projections Wednesday afternoon.

 

Drier weather was also seen as a weight on the market.

 

"The sun's going to shine, and we're going to have some harvest," said Sid Love, analyst for Kropf and Love Consulting.

 

But fundamentals seem to be playing little role in recent market activity, as prices track movement in the dollar, crude oil and other markets, traders said.

 

"The long-term implications for corn didn't really seem to affect today's trade," said Terry Reilly, analyst for Citigroup.

 

Wednesday's losses in the face of supportive outside markets does not mean traders were ignoring those markets. A floor trader said corn's early retreat was caused by profit-taking as the market was unable to follow crude oil higher.

 

Reilly said the market backtracked after profit-taking cut into gold prices.

 

Analysts said that the recent surge of fund-buying might have run its course by Wednesday, as the funds typically take two or three days to establish new positions.

 

Looking ahead, the trade is awaiting Tuesday's supply and demand and crop estimates from the U.S. Department of Agriculture. Estimates vary as some see a reduced crop due to the lousy October weather.

 

CBOT oats futures were mostly higher. December oats ended up 1 cent to US$2.58 per bushel, and March oats ended up 3/4 cent to US$2.71 1/2.

 

Ethanol futures were higher. November ethanol ended up US$0.020 to US$1.970 per gallon, and December ethanol ended up US$0.001 to US$1.866.