September 12, 2008
CBOT Corn Review on Thursday: Drifts lower as trade awaits USDA report
Chicago Board of Trade corn futures drifted lower Thursday, with positioning and caution ahead of Friday's crop production report limiting price movement, traders said.
September corn, which is in delivery, ended down 1/4 cent to US$5.22 1/4. December corn ended down 3 1/2 cents to US$5.33 1/4 and March corn ended down 3 1/2 cents to US$5.52 1/4.
Thursday's market stalled due to "a cessation of trading interest ahead of tomorrow's report," said Joel Karlin, analyst for Western Milling.
"It appears the path of least resistance is lower," Karlin added.
Short-covering limited losses, traders said, as the market is oversold following consistent losses this week. But as with all recent climbs in the market, Thursday's rally was fleeting, a trader noted.
The USDA's crop production and supply and demand estimates will be released Friday at 8:30 a.m. EDT. Analysts on average expect the government to reduce its production estimate, to 12.152 billion bushels from 12.288 billion, and its yield estimate to 153.3 bushels per acre from 155 bushels.
Many traders and analysts say the report will not be a good indicator of final production numbers, because of a late planting season that has left the USDA with less information to analyze than they would normally have for the September report.
Bulls need a supportive report to finally spark a sustained rally, traders and analysts say.
"If it's a benign report, we'll return to trading the macro components we've kind of been a slave to," a trader said.
Prices have dropped steadily the past couple of weeks, from an intraday high of US$6.23 in the December contract Aug. 25. Some analysts said the market could be on the way to testing its low last month of US$5.04, especially if Friday's report isn't bullish.
Weather was not a major factor in Thursday's activity, although traders were eyeing Hurricane Ike, which is forecast to make landfall in Texas this week. Ike's remnants could provide some beneficial rains for the crop, but flooding is a concern, traders said.
CBOT oats futures continued their slide, with prices hitting their lowest point since early January. Trading was light Thursday, and oats remained under pressure from other grains and its own fundamental weakness, a trader said.
September oats ended down 7 1/2 cents to US$3.17 per bushel, December oats ended down 7 1/2 cents to US$3.30 and March oats ended down 7 1/2 cents to US$3.47 1/2.