August 23, 2008
CBOT Corn Review on Friday: Down on outside market pressure
Chicago Board of Trade corn futures fell under the outside influence of a rebounding U.S. dollar and speculative selling interest in crude oil and precious metals, brokers and analysts said Friday.
A stronger dollar makes many commodities unattractive as it makes it more expensive to foreign buyers.
Most-active December corn fell 11 cents to settle at US$6.06 1/2 a bushel, near the US$6.02 session low.
Market-watchers attributed very little, fundamentally, to the decline, chalking it up instead to the sway of large investment money.
"There's not a whole lot to say other than we were held hostage to the movements of the dollar once again and a little profit-taking came into the market after running prices up to almost five-week highs," a broker said.
Despite the losses, which were also felt in soybeans and wheat, traders continued to point to concerns over dry weather potentially hurting corn yields.
"We're looking fairly dry here," said Leo Burns, broker/analyst at IRA Epstein & Co. in Chicago.
"There's going to be a cold front that passes through in the middle to end of next week, but it's not real moisture-laden," he said.
The other big question in the market is the actual size of the crop, which the U.S. Agriculture Department in August estimated at 12.3 billion bushels with an average yield of 155.0 bushels an acre.
The Pro Farmer Advisory Service on Friday estimated the corn crop at 12.152 billion bushels with an average yield of 153.3 bushels an acre. The shrinking crop is largely in-line with ideas that the immature crop and dry weather is crimping yield potential, the broker said.
Scattered showers are falling Friday in parts of Indiana, southeastern Missouri and into southern Illinois, but many dry areas of the Midwest will likely miss out on beneficial rain this weekend and early next week, forecasters said.
Mike Tannura, a forecaster at T-Storm Weather, said rain this weekend will not offset the dry August weather "and it is likely that more rain will still be desired." The strongest chances for rain next week are for the western corn belt and the Great Plains. Any remnants from Tropical Storm Fay are expected to remain south of the corn belt.
DTN Meteorlogix calls for 0.10-0.60 inch of rain and locally heavier amounts in the eastern corn belt Friday and Saturday, with southern and eastern Illinois and points eastward. Only light showers are forecast in southern areas on Sunday.
The six- to 10-day outlook for the Midwest calls for near to above-normal temperatures and average to below-normal rainfall.
Funds were estimated to have sold 5,000 corn contracts.
In other markets, CBOT oat futures closed lower with the rest of the grain floor. Statistics Canada's estimate for oat production of 4.06 million metric tonnes was construed as bearish, as traders were looking for a forecast of 3.34 million to 3.7 million tonnes, a CBOT floor analyst said. September oats stumbled 11 1/2 cents at US$3.65 per bushel, and December oats dropped 12 cents to US$3.84.
Ethanol futures were weaker. September ethanol ended 5.8 cents lower at US$2.34 per gallon, and December ethanol closed 6.7 cents lower at US$2.31 per gallon.