September 6, 2008

 

CBOT Corn Review on Friday: Ends down sharply on bearish outside markets

 

 

Chicago Board of Trade corn futures fell Friday as the market continued to be pummeled by broad-based fund liquidation amid concerns about world demand, traders said.

 

September corn was down 17 3/4 cents to US$5.31 1/2 per bushel, December corn was down 16 cents to US$5.48 1/2, and March corn was down 16 cents to US$5.67 1/4.

 

Corn and other agricultural commodities fell amid pressure from outside influences, analysts said.

 

"Right now it's about money flow," said Arlan Suderman, analyst for Farm Futures.

 

As currencies around the world weaken, many are running to safety in the dollar, "and a lot of traders simultaneously sell the commodities," Suderman said.

 

With little strong fundamental news of its own, corn's fall was prompted when the dollar climbed and crude oil fell early in the day despite a negative U.S. unemployment report.

 

"That was about all she wrote," a trader said.

 

Estimates from private analytical firm Informa Economics added to the pressure Friday, traders said. Informa projected total 2008-08 production of 12.406 billion bushels, up from the USDA's August estimate of 12.288 billion bushels, with a yield of 156.5 bushels per acre, up from the government's projection of 155 bushels per acre.

 

The U.S Department of Agriculture will release updated projections Sept. 12.

 

The Informa projections are above several other trade estimates released this week, all of which are lower than the USDA's August estimates. Some traders disputed the accuracy of the report while acknowledging it weighed on the market.

 

"You have to trade it, but it's not the USDA, and we know Informa is usually pretty bearish," a trader said.

 

A lack of an early frost in the forecast was also bearish, traders said. But some traders say the current cool weather is not good for a crop that could use more warmth to reach maturity.

 

Corn's close below US$5.50 in the December contract shows more technical weakness, analysts said. A trader said there is little sign of fundamental support on the way next week.

 

"We'll probably have short-covering rallies," a trader said. "But in order to sustain it we need a supply shock."

 

CBOT oats futures ended lower. September oats ended down 1 cent to US$3.27 per bushel, December oats ended down 2 cents to US$3.41 and March oats ended down 2 cents to US$3.58 1/2.

 

Ethanol futures ended lower. December ethanol ended down US$0.084 to US$2.161 per gallon.