December 10, 2010

CBOT corn stays flat on USDA crop reports

CBOT corn ended nearly unchanged on Thursday (Dec 9), trading in and out of negative and positive territory as traders braced for Friday's (Dec 10) crop reports.

CBOT corn for March delivery, the most-active contract, slipped US$0.01 one-quarter, or 0.04%, to US$5.74 one-quarter a bushel.

Overall, the market continued to trade within a congested trading range, with the unwinding of some risky positions ahead of government crop reports and the uncertainty surrounding the extension of ethanol tax credits keeping traders in a cautious mode, said an analyst.

Grain traders were cautiously awaiting the USDA to update its supply and demand forecasts in a monthly crop report due Friday (Dec 10).

Traders took profits on trades after corn futures rallied 2.3% on Wednesday (Dec 8), analysts said.

The market traded in both negative and positive territory, but support was generated from firm wheat prices buoying grain futures while tight supply outlooks provided fundamental strength, the analyst said.

In the supply and demand report, strong ethanol demand should result in lower corn ending stock.

The long-term outlook for corn remains supportive as US supplies are projected to reach a 15-year low by August 31, 2011, the end of the crop's marketing year, analysts said.

Meanwhile, dryness in Argentina, the second-largest corn exporter after the US, is providing some tough growing conditions for corn crops, a supportive factor adding price strength.

Strong demand for corn from the ethanol industry is a draw on corn inventories, and with reports that the US Congress was looking to extend a blender's tax credit at the current US$0.45 level, demand is expected to continue to be strong, analysts said.