September 17, 2008

 

CBOT Corn Review on Tuesday: Tumbles; drops limit on speculative sales

 

 

Chicago Board of Trade corn futures tumbled Tuesday, with most contracts dropping to their exchange imposed 30-cents daily trading limit, as bearish economic factors attract speculative selling.

 

December corn ended 29 3/4 cents lower at US$5.32 1/4 per bushel, and March finished 30 cents lower at US$5.50 1/4.

 

The grain markets were more concerned with what's happening in the financial sector, with the absence of fresh supportive fundamental news to offset the defensive tonnee sending buyers running for cover, analysts said.

 

Wholesale speculative long liquidation and the establishment of new short positions were featured attractions, with sharp losses in crude oil and strength in the U.S. dollar key influences.

 

The fallout from Lehman Brothers' bankruptcy, Merrill Lynch's sale to Bank of America and AIG shopping for fresh capital to stay afloat, continued to promote bearish momentum, as investors pulled money out of hard assets, analysts added.

 

Meanwhile, favorable weather conditions for the drying of flooded Midwest fields and late maturing crops across the U.S. heartland added to the defensive tonnee, traders said.

 

The anticipation of a slowdown in export demand as a result of global economic woes served as another defensive feature to keep buyers sidelined.

 

However, end-user buying limited selling in early action, with bullish underlying fundamentals associated with Friday's smaller crop production forecasts providing mild strength. Nevertheless, the market is currently in a money game, and until that runs its course, fundamentals will take a back seat, a CBOT floor analyst said.

 

The DTN Meteorlogix weather forecast features dry conditions during the balance of this week across the Midwest. This trend offers the potential to firm up yield prospects for fall harvest, and will allow fields to dry out after flooding rains last week.

 

Temperature values in the corn belt will be up to 15 degrees Fahrenheit above normal this week. Actual readings will range from 75 to 82 Fahrenheit. This temperature trend will further benefit crops needing to ripen and fields needing to dry out, Meteorlogix added.

 

In pit trades, speculative fund selling was estimated at 6,000 lots.

 

CBOT oat futures closed lower with the rest of the grain floor. December oats fell 13 1/2 cents to US$3.26 1/4 per bushel, and March oats dropped 13 cents to US$3.44 1/4.

 

Ethanol futures stumbled. October ethanol shed 8.7 cents to US$2.14 per gallon, and November ethanol lost 7.8 cents to US$2.122.