September 10, 2008
CBOT Corn Review on Tuesday: Ends lower on crude; rally fizzles
Chicago Board of Trade corn futures ended lower Tuesday on pressure from crude oil, as the market continued to show its inability to maintain a rally, traders said.
September corn ended down 3 1/2 cents to US$5.29 1/2, December corn ended down 4 1/2 cents to US$5.44 1/2 and March corn ended down 4 1/4 cents to US$5.63 1/2.
After dropping sharply at the open, corn climbed throughout the day, venturing briefly into positive territory late in the session. But prices quickly retreated again.
Traders said the market is unable to break free of pressure from commodity-wide liquidation. Funds sold 4,000 contracts Tuesday.
"We still have disinvestment in the commodities markets as the overriding theme right now," a trader said.
The market found some support Tuesday from a weaker dollar and soybeans, traders said.
The re-emergence of some long-range weather forecasts calling for frost in the U.S. corn belt around Sept. 20 also supported prices Tuesday, traders added.
A trader said the frost forecast had a greater impact on soybeans, since that crop has a later season and is more likely to sustain damage. But a rally in soybeans could provide spillover support to corn, he said.
The trade is looking ahead to Friday's crop production estimates from the U.S. Department of Agriculture. The report will be released Friday at 8:30 a.m. EDT.
Most traders and analysts expect the government to lower its yield projection from the August estimate of 155 bushels per acre.
"If the government confirms what Informa and FC Stonnee says, we could go lower," a trader said, referring to private forecasts projecting gains or just a slight decrease in yields. "I would say anything under 152, this thing's going to rally."
But many analysts say it will take longer for a clear picture of this year's crop to emerge. Western Milling analyst Joel Karlin said he didn't expect the trade to pay much heed to the report, noting that in each of the past two years the USDA's September estimates were lowered significantly by the final report in January.
CBOT oats futures ended lower. September oats were down 2 cents to US$3.27 per bushel, December oats were down 2 cents to US$3.40 and March oats were down 2 cents to US$3.57 1/2.
Ethanol futures were mixed. December ethanol ended up US$0.001 to US$2.165 per gallon and January ethanol ended down US$0.003 to US$2.160.