November 12, 2010

CBOT corn ends down for fifth day, extends correction

US corn futures ended lower for the fifth consecutive day Thursday, continuing the market's correction from prior gains as traders reduce risk exposure in the market.

CBOT December corn ended US$0.02 three-quarters, or 0.5%, lower at US$5.85 one-quarter a bushel.

Follow-through selling from previous trading sessions was featured, with new crop contracts leading downside movement on higher projected 2011 acreage forecasts from analysts. Speculative fund selling was estimated at 16,000 lots.

The liquidation of long positions by speculative traders pinned prices lower, with the unwinding of long deferred month contracts versus short nearby contract spreads allowing new crop futures to lead the market lower.

Analysts on Thursday (Nov 11) projected that US farmers in 2011 will plant 5.6% more acres with corn than in 2010.

Analysts raised their estimates for corn plantings to 93.1 million acres, up 2.7 million acres from its September forecast, traders said. The USDA estimates farmers in 2010 planted corn on 88.2 million acres.

The acreage forecast gave the market a signal that prices were high enough to achieve increased acres as well as cut demand since export sales have slowed during the market's uptrend, analysts said.

Traders are also factoring in that Tuesday's (Nov 9) lower crop and ending stocks forecast may be the last bullish report of the year, said an analysts. This enticed traders to take some profits, he added.

Corn futures had previously climbed more than 75% since June on worries the 2010 harvest supplies wouldn't be large enough to meet strong demand. The US is the world's largest producer of corn, relied on to keep global markets adequately supplied.

Prices have fallen US$0.41 since Tuesday's high of US$6.05, and traders note that demand has appeared to weaken at the higher prices.