December 3, 2009

 

CBOT Corn Review on Wednesday: Ends lower on crude, weak demand

 

 

Weak demand and a slump in crude oil prices sent Chicago Board of Trade corn futures lower Wednesday, analysts said.

 

December corn ended down 8 cents to US$3.91 3/4 per bushel and March corn ended down 8 cents to US$4.06 1/2.

 

There was little reason for bulls to be excited Wednesday, thanks to a lack of fundamental support and a drop in crude oil prices of almost US$2, analysts said.

 

Fundamentally, the market is weak. Cash corn basis levels in many sections of the U.S. interior are at multiyear lows, pressured by accelerated farmer sales as the 2009 harvest finally draws to a close.

 

The demand has been weakened in part due to quality concerns. With the harvest finishing up, the market usually turns to demand rather than supply, but the demand news has been mostly non-existent, analysts said.

 

The Environmental Protection Agency on Tuesday said it was delaying a decision on an increased ethanol blend, preventing a boost in demand, and export demand has been particularly has been weak.

 

"We are not getting the job done" Joe Victor, vice president of marketing for Allendale, said of U.S. exports.

 

Jason Ward, an analyst with Northstar Commodity, said that after rallying 30 cents since Nov. 24, "I think you're seeing some profit-taking."

 

Some still see continued slow harvest pace as supportive. The U.S. Department of Agriculture said that 79% of the corn harvest was finished as of Sunday. A couple traders said they expected progress around 90% in the next weekly report, to be issued Monday.

 

Funds sold an estimated 9,000 contracts Wednesday.

 

The market has slumped 11 cents the past two days, following the EPA's announcement on the ethanol blend. A floor analyst said the decision "certainly wasn't friendly" to corn in the near-term. But he and others say that it appears the EPA will ultimately approve an increase next year, which would be supportive to corn contracts in the 2010-11 marketing year.

 

CBOT oats futures ended lower Wednesday. December oats ended down 3 1/2 cents to US$2.51 1/2 per bushel and March oats ended down 4 cents to US$2.63 1/2.

 

Ethanol futures were lower. December ethanol ended down US$0.029 to US$2.130 per gallon and March ethanol ended down US$0.029 to US$2.027.