July 24, 2008


CBOT Corn Review on Wednesday: Slightly lower as rally fizzles



Chicago Board of Trade corn futures ended slightly lower in volatile trade Wednesday, with the market unable to sustain a rally due to continued pressure from crude oil and fund liquidation.


September corn ended down 2 cents to US$5.71 1/2 per bushel, December corn closed down 1 3/4 cents to US$5.90 1/2, and March settled down 1 1/2 cents to US$6.09 3/4.


Prices were down almost 30 cents - the exchange-imposed daily trading limit - early in the day, and were higher by almost 15 cents in afternoon trading.


"I just think it's unbelievable how volatile these markets are," said Sid Love, analyst with Kropf and Love consulting. "I don't know how anybody is making money."


Analysts said crude oil had a lot to do with corn's movement. Corn's rally coincided with a bounce that sent crude oil prices briefly higher, and corn fell after crude broke again.


There was no change in bearish weather forecasts to support the rally, traders said.


"I think the market ran out of sellers," a trader said. He added that light volume likely "exaggerated" the extent of the rally.


Traders said a sustained rally was unlikely until some fresh fundamental news entered the market. Wednesday's brief rally could prove to be "a pretty pathetic dead-cat bounce," a floor analyst said.


But he added that there are still potential concerns for the crop due to its late planting. Analysts say an early frost, or even a normal first frost in some areas, could cause significant damage.


"The crop's not in the bin yet, and it won't be for a long time," he said.


Many traders and analysts also say the market is oversold and is due for a rally.


Corn has fallen this week amid widespread commodity liquidation, which comes on top of weeks of nearly perfect crop-growing weather. With weather forecasts showing no excessive heat and dryness on the way, "it looks like we're going to scoot through the wide window of pollination unscathed," an analyst said.


There has at times appeared to be panic-selling, traders and analysts said. December prices have fallen from a close of US$7.77 on July 3.


"There's a lot of emotions, a lot of 'get me out orders,'" said Jerry Gidel, analyst with North America Risk Management Services.


CBOT oats were lower Thursday. September oats were down 2 cents to US$3.85 per bushel, December oats were down 2 cents to US$4.03 and March oats were down 2 cents to US$4.22. A trader said fund-selling pressured the market early in the day, and activity was light late.


Ethanol futures were slightly higher. September ethanol was down US$0.006 to US$2.260 per gallon and December ethanol was down US$0.016 to US$2.260.


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