August 27, 2008

 

CBOT Corn Review on Tuesday: Falls on dollar, technical selling

 

 

A stronger dollar and technical weakness pushed Chicago Board of Trade corn futures lower Tuesday, as the market struggled amid a lack of news, traders said.

 

September corn ended down 5 cents to US$5.75 1/4 per bushel, December corn ended down 6 cents to US$5.94 and March corn ended down 6 cents to US$6.13 1/2.

 

Prices fell at the open and budged little in a day characterized by "pockets of extreme quietness," a trader said. Volume was moderate because of spread trading, the trader said.

 

A stronger dollar was a key factor in the market's drop, traders said. Corn and other commodities fell despite higher crude oil prices, which climbed on concerns about Hurricane Gustav.

 

An analyst said traders weighed the effects of the dollar's climb and commodity liquidation with a fundamental picture that is somewhat supportive.

 

"We're sort of caught in the crossfire here," said Joel Karlin, analyst for Western Milling.

 

Overall, speculative money continues to flow out of corn and other commodities, another analyst said.

 

The market has stumbled since failing to break through US$6.25 in the December contract, analysts said.

 

The crop remains behind schedule, and the trade is eyeing long-range forecasts for any signs of an early frost, which would likely damage yields, analysts said. The trade is also looking for rainfall forecasts, as cornfields are dry in many areas across the U.S. corn belt.

 

A trader said Hurricane Gustav could support corn by boosting crude oil prices, but is also a potentially bearish influence in that it could provide the corn belt with needed moisture.

 

Another trader said it was "ridiculous" for the corn market to be focusing on Hurricane Gustav because it's still several days from a potential U.S. landfall.

 

"But it will be watched," the trader said.

 

An analyst said corn "just seemed to be collapsing along with wheat and a lack of real news."

 

Demand is seen as relatively weak, which has added pressure to the market, traders said.

 

CBOT oats futures ended at new lows, with the September and December contracts hitting their lowest prices since Feb. 1. A trader said "funds were good sellers on the close." September oats ended down 9 cents to 3.55 per bushel, December oats ended down 9 cents to US$3.73 and March oats ended down 9 cents to US$3.91.

 

Ethanol futures were slightly lower. September ethanol ended down US$0.001 to US$2.438 per gallon and December ethanol ended down US$0.010 to US$2.290.