January 12, 2010

 

CBOT Corn Review on Monday: Ends lower ahead of USDA reports

 

 

Chicago Board of Trade corn futures ended lower Monday amid cautious trade ahead of Tuesday's key government reports, analysts said.

 

March corn ended down 1/2 cent to US$4.22 1/2 and May corn ended down 1/4 cent to US$4.33.

 

Prices traded a tight range during the session, and were lower most of the day.

 

"I think some people are just taking a few profits ahead of the USDA report," said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

The U.S. Department of Agriculture will release crop production and stocks reports Tuesday at 8:30 a.m. EST. Most traders are expecting a reduction in crop size and 2009-10 ending stocks, although they say that weak demand will likely keep the carryout projection from dropping too significantly.

 

Farm Futures analyst Arlan Suderman added that the market took out a little weather premium thanks to warmer weather forecast for next week. Cold weather has boosted prospects for feed demand, as shivering livestock need to eat more corn to maintain body weight, analysts say.

 

Prices traded a tight range during the session, and were lower most of the day. The market rebounded late in the session, climbing almost back to unchanged, although traders were unsure what role index fund rebalancing played in that. Funds sold an estimated 3,000 contracts on the day.

 

McCambridge added that weekly export inspections released by the USDA on Monday were "below trade expectations, which were low to begin with."

 

Index fund rebalancing, which has been a supportive factor in the market in recent days, is expected to continue through Thursday, according to traders.

 

Fundamentally, the market remains weak, some analysts say. They add that it could take significant outside market support to propel prices past resistance around US$4.25.

 

In other news, Argentina is on track to produce up to 17.5 million metric tonnes of corn from the 2009-2010 crop, which means there will be more than expected available for export, President Cristina Fernandez de Kirchner said Monday.

 

CBOT oats ended lower. March oats fell 7 cents to US$2.68 per bushel and May oats ended down 7 cents to US$2.76 1/4.

 

Ethanol futures were lower. February ethanol settled down US$0.009 to US$1.909 per gallon and March ethanol ended down US$0.011 to US$1.908. (Charles Newbery contributed to this report.)