September 3, 2008

 

CBOT Corn Review on Tuesday: Down on crude, rain, but off day's lows

 

 

A break in crude oil prices and weather forecasts calling for rain in the U.S. corn belt pushed Chicago Board of Trade corn futures lower Tuesday, traders said.

 

September corn ended down 15 1/4 cents to US$5.53 per bushel, December corn ended down 15 3/4 cents to US$5.69 1/4 and March corn ended down 16 cents to US$5.88.

 

Fundamentals took a back seat Tuesday, traders said, as the market followed a plunge in crude oil, which dropped below US$110 per barrel on optimism that U.S. Gulf Coast infrastructure dodged a bullet from Hurricane Gustav.

 

"Crude oil did a belly flop and dragged everything with it," an analyst said.

 

Corn continues to be caught up in an environment of widespread commodity liquidation, traders said.

 

Weather was also seen as a bearish influence by traders. Forecasted rain this week from the remnants of Hurricane Gustav in the corn belt is expected to help a crop that has been stressed by a dry August.

 

The absence of frost in the forecast was also bearish, analysts said. The trade is sensitive to any signs of an early frost because the crop was planted late and needs more time to fulfill its yield potential, analysts say.

 

After gapping lower on the open and dropping almost by the daily trading limit of 30 cents, corn trimmed its losses throughout the day and closed near session highs. The rebound had more to do with outside markets than any news for corn, traders aid.

 

"Beans are following crude oil, and the corn I'd imagine is following the beans," a trader said.

 

But he added that corn retains downside technical momentum.

 

"Corn still looks pretty sloppy to me," he said.

 

Traders expect the USDA's crop progress report, which is scheduled for release at 4 p.m. EDT, to show a drop of 1 to 3 percentage points in the crop rated good-to-excellent. Such a decline would be normal for this time of year, analysts said.

 

CBOT oats futures ended slightly lower in sympathy with other markets, a trader said. Trade was very light on the day, he added. September oats were down 1 1/4 cents to US$3.44, December oats were down 2 1/4 cents to US$3.60 and March oats were down 2 3/4 cents to US$3.77 1/2.

 

Ethanol futures were lower. September ethanol ended down US$0.135 to US$2.235 per gallon and December ethanol ended down US$0.044 to US$2.250.