March 24, 2010

 

CBOT Corn Review on Tuesday: Stumbles in the absence of fresh support

 

 

Chicago Board of Trade corn futures stumbled Tuesday, sliding to the lower end of a recent trading range on a lack of fresh fundamental support.

 

Nearby CBOT May corn, which is also the most-active contract, ended eight cents, or 2.16%, lower at US$3.62 3/4 per bushel.

 

The corn market is having a hard time finding a supportive feature to underpin prices, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D.

 

Ample world supplies and sluggish export demand continue to serve as bearish features limiting upside potential.

 

Warmer, drier Midwest weather forecasts added to the lower tonnee. The weather enticed traders into extracting some risk premium from prices, as the drier conditions took away the threat of potential planting delays for corn, said Hoops.

 

A firmer U.S. dollar and the uncertainty about the end-of-month acreage and stocks report added psychological pressure to keeping futures pinned in negative territory.

 

Technical selling played a key role in the declines, with losses accelerating once prices slipped below prior lows. However, the ability of the most active May future to hold above chart support at the March low provided some strength to limit losses, Hoops said.

 

A technical analyst said market bulls have given up their recent momentum and the daily bar chart for May corn now shows a three-week-old downtrend line is in place. A close below the February low of US$3.59 a bushel would produce serious near-term chart damage to then suggest a fresh leg-down in prices, he added.

 

Otherwise, activity was quiet, with prices continuing in a sideways direction, as many traders stay on the sidelines awaiting fresh directives.

 

Speculative funds were estimated sellers of 7,000 lots in corn. Fund activity is a measure of investment money flow in the market.

 

CBOT oat futures ended lower. May oats finished two cents, or 0.92%, lower at US$2.16 1/2 a bushel.

 

Ethanol futures ended lower. April ethanol ended US$0.004, or 0.26%, lower at US$1.564 per gallon, and May ethanol finished US$0.008, or 0.50% lower, at US$1.587.