December 8, 2009

 

CBOT Corn Review on Monday: Ends lower on techical pressure, weak demand

 

 

Weak fundamentals and technical pressure helped send Chicago Board of Trade corn futures lower on Monday.

 

December corn ended down 5 cents at US$3.68 3/4, March corn ended down 4 3/4 cents at US$3.83 3/4, and May corn ended down 4 1/4 cents at US$3.94 3/4.

 

The market traded lower for most of the day despite gains in the soy market, where demand is much more robust.

 

Demand for corn is weak, which was highlighted again Monday by the U.S. Department of Agriculture's report on grain inspections for export. The USDA reported corn inspections of 25.920 million bushels for the week ended Dec. 3, down from 29.852 million the prior week and at the low end of expectations between 23 million and 35 million.

 

Analysts said trend-following funds are liquidating as the market looks bearish technically. Funds sold an estimated 7,000 contracts Monday.

 

Traders and analysts are expecting the USDA to put the corn harvest at about 90% complete as of Sunday, when it releases crop progress estimates at 4 p.m. EST. With most of the harvest done, snowfall this week in the Midwest is seen only as mildly supportive.

 

Technically, the market is looking bearish, analysts said. Friday's losses negated an upward trend, and Monday's action was "likely a continuation of what we saw last week," said Marty Foreman, analyst for Doane Advisory Services.

 

He noted that crude oil prices were lower, another bearish factor cited by traders.

 

The market is looking ahead to Thursday's supply-and-demand estimates from the USDA, scheduled for release at 8:30 a.m. EST. Analysts on average are expecting the USDA to peg 2009-10 carryout at 1.646 billion bushels, up from the government's November estimate of 1.625 billion.

 

Sid Love, analyst for Kropf and Love Consulting, said the December USDA report is usually "kind of a ho-hummer," and the January report will be more significant.

 

CBOT oats futures ended mostly lower. December oats ended down 1 cent at US$2.42 1/2 per bushel, and March oats ended down 1 1/2 cents at US$2.55 1/2.

 

Ethanol futures were down slightly. January ethanol settled down US$0.001 at US$1.982 per gallon, and March ethanol ended down US$0.006 at US$1.880.