December 31, 2009

 

CBOT Corn Review on Wednesday: Ends down on dollar, year-end positioning

 

 

Chicago Board of Trade corn futures ended lower Wednesday amid pressure from the dollar and year-end positioning, traders said.

 

March corn ended down 3 1/4 cents to US$4.13 3/4 per bushel, and May corn ended down 3 1/2 cents to US$4.23 1/2.

 

The market fell sharply on the open but trimmed losses throughout the day, as concerns about the crop and expectations of index fund buying to start the year limited losses.

 

"It's thin-volume trade with a lot of positioning being done," a broker said.

 

A stronger dollar weighed on prices, analysts added.

 

Volumes could remain light and trade choppy in Thursday's abbreviated session. The market will close at 1 p.m. EST (1800 GMT) and will be closed Friday for the New Year's Day holiday.

 

Technically the market is pointing higher, analysts say. Much of the recent support has stemmed from expectations that index fund rebalancing at the start of the new year will be bullish for corn.

 

A floor analyst said that increases in open interest the past couple sessions, when prices climbed, seemed to indicate that some traders were buying in anticipation of the index fund activity.

 

Wednesday's initial slide was accelerated as the market hit sell stop orders at US$4.08 1/2 and US$4.06, a trader said. The March contract dropped to US$4.00 1/2 in electronic trade, 6 cents lower than the low in the pit.

 

Traders said there was speculation on the floor that an electronic trader mistakenly put in a sale for 8,000 contracts rather than 800, leading to the early plunge. But one trader said that was all but impossible to verify, as "nobody is going to face up to an 8,000-lot error."

 

Historically, the market could be in a strong position Thursday. Farm Futures noted in a commentary that "the March contract settled steady to higher in each of the past 7 years on the final trading day of the year."

 

CBOT oats futures climbed Wednesday. March oats ended up 7 1/4 cents to US$2.76 1/4 per bushel and May oats ended up 6 1/2 cents to US$2.84 1/4.

 

Ethanol futures were slightly higher. January ethanol was up US$0.016 to US$1.939 per gallon and March ethanol was up US$0.002 to US$1.899.