November 19, 2009

 

CBOT Corn Review on Wednesday: Corn corrects lower; hovers around US$4

 

 

Chicago Board of Trade corn futures ended lower Wednesday, retreating back below US$4 in a mild correction after early gains.

 

December corn ended down 4 cents to US$3.98 per bushel and March corn ended down 3 3/4 cents to US$4.13 3/4.

 

The market climbed in early trade but slipped later, along with wheat and soy. Vic Lespinasse, analyst for grainanalyst.com, says as corrections go, Wednesday's dip was mild, and bulls remain "in the driver's seat."

 

"A real correction would have been more dramatic than this," he said.

 

The market is hovering around US$4, the strike price for a significant number of December options, which expire Friday. While US$4 has had a gravitational pull on the market, Jason Britt, president of Central State Commodities, said that doesn't mean the market couldn't "take off toward another strike price."

 

Lespinasse said that if prices stray too far from US$4, "there could be some real fireworks.

 

The market has support from the harvest, which has stalled again amid rains this week in much of the corn belt. Forecasts call for more moisture next week.

 

There are also concerns about disease with the crop. Vomitoxin in particular is a concern, and traders are awaiting an official announcement from CME Group on new limits on vomitoxin in the corn futures contract. The CME said Monday it will announce the limits this week. New limits are mostly seen as supportive, as it would boost confidence in the quality of the contract and limit the amount of deliverable supplies.

 

But Britt said that whatever supportive elements are in the market, the question remains whether they have already been priced in with corn at US$4. Current demand does not justify corn above US$4, according to some traders.

 

The market slipped despite a weaker dollar. After dominating the direction of agricultural commodities for weeks, more recently the dollar's influence has been less clear, traders say.

 

CBOT oats futures ended lower. December oats ended down 2 cents to US$2.59 1/2 per bushel and March oats ended down 2 cents to US$2.73.

 

Ethanol futures were higher. December ethanol was up US$0.019 to US$2.120 per gallon and January ethanol was up US$0.007 to US$2.009.