July 11, 2008


CBOT Corn Review on Thursday: Down on weather, pre-report consolidation



Chicago Board of Trade corn futures continued to slide Thursday, ending lower on continued bearish weather and consolidation ahead of a government report Friday.


July corn closed down 7 3/4 cents at US$6.75 1/4 a bushel, September corn closed down 8 1/4 cents at US$6.86 1/2 and December corn closed down 8 1/2 cents at US$7.04 1/4.


Although prices failed to breach an important US$7 barrier for the December contract, traders and analysts said the market showed few signs of reversing its downward trend.


"I think the mindset of the people we've talked to is still decidedly negative because the weather is still not an issue, and they feel the supply is increasing more than the demand," said Mike Zuzolo, a senior analyst for Risk Management Commodities in Lafayette, Ind.


Traders were defensive Thursday as they consolidated ahead of a government report Friday on ending stocks, analysts added. The U.S. Department of Agriculture supply-and-demand report will be released at 8:30 a.m. EDT. The trade expects the government will increase projected ending stocks for both the 2007-08 and 2008-09 marketing years, reflecting improved production-and-demand rationing.


A pattern of scattered showers and thunderstorms along with moderate temperatures across the U.S. corn belt has boosted the outlook for the crop, analysts said.


Traders said the market's psychology has changed since the USDA's June 30 planted acreage and grain stocks report, which showed increased numbers for corn and a tighter balance sheet for soybeans. While corn fell Thursday, soybeans climbed about 30 cents, with funds buying November soybeans and selling December corn.


"Everybody wants to own beans against corn right now," the trader said.


At the same time, a trader and an analyst said that a widening corn-bean spread sparked a rebound during midday trading. December corn hit an intraday low of US$7.01 before rebounding several cents.


Zuzolo said a lack of sell-stops and strength in beans "kept sellers at bay" when prices dipped to their intraday lows.


Traders and analysts said Thursday's report of net export sales of 644,300 metric tonnes for the week ended July 3 was "neutral."


A late spike in crude oil Thursday caught the attention of traders after the close, but a trader said the increase didn't have time to have an effect on corn.


CBOT oats ended sharply higher. July oats closed up 17 cents at US$4.40 1/2 a bushel, September oats ended up 16 cents at US$4.49 1/2 and December oats ended up 18 cents at US$4.67 1/2. A floor trader said the buying appeared to be based on technical support.


Ethanol futures were lower. September ethanol ended down US$0.014 at US$2.700 a gallon and December ethanol ended down US$0.029 to US$2.721.


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