November 18, 2009
CBOT Corn Review on Tuesday: Down slightly; spread trade, dollar weighs
Chicago Board of Trade corn futures ended mostly lower Tuesday, as the market was pressured by a strong dollar and spread trade.
December corn ended down 1/4 cent to US$4.02 per bushel and March corn ended flat at US$4.17 1/2. Other contracts ended lower.
Strength in the dollar was seen as a bearish factor early in the day, although that did little to hold down wheat or soy. Wheat climbed more than a dime and soy rose more than 20 cents.
Mike Zuzolo, president of Global Commodity Analytics and Consulting, says spread trading was a factor in corn's struggles, as the ratios with wheat and soy favor selling corn and buying those markets.
"I don't really participate in the idea that the dollar was the key indicator in why the corn was weak today," Zuzolo said. "I think it was more inter-market spreading."
And to the extent a stronger dollar might have pressured the market, that was balanced by ideas that the dollar is likely to decline further, an analyst said.
The market had reason to climb, given the slow harvest, lousy weather and announced export sales to Mexico, Zuzolo said.
Wet weather this week is bringing harvest to a halt again in many areas, with heavy rains reported in parts of central Illinois.
"I guess I'm a little disappointed (in the setback), but the money keeps coming," a trader said.
Despite that short-term fundamental support, a lot of traders and analysts say there's little reason for corn to be up around US$4 in the first place, as demand remains weak.
Funds were even on the day.
The market has hovered around US$4, which happens to be the strike price for a lot of December options, which expire Friday.
CBOT oats futures ended lower Tuesday. December oats ended down 2 1/2 cents to US$2.61 1/2 per bushel and March oats ended down 2 1/2 cents to US$2.75.
Ethanol futures were higher. December ethanol was up US$0.019 to US$2.101 per gallon and January ethanol settled up US$0.022 to US$2.002.
