September 26, 2008

 

CBOT Corn Review on Thursday: Slides on crop outlook, lack of news

 

 

Chicago Board of Trade corn futures closed lower Thursday amid cautious trade and optimism about the crop, traders said.

 

December corn ended down 4 3/4 cents to US$5.58 1/4 per bushel and March corn ended down 4 1/2 cents to US$5.76.

 

The market continued to eye Washingtonne for news on the government's planned financial bailout, and many are waiting on the sidelines until there is a resolution, traders said. There was little news or direction for corn on Thursday, traders said.

 

A trader said the market was "caught in between, with no buying in either direction."

 

"Everybody's waiting for the bailout package," he said.

 

Traders said the market is getting little support from the weather, which has been warm and favorable for the crop this month. Although temperatures are supposed to drop next week, many traders and analysts said there still appears to be little chance of a damaging freeze.

 

There are initial reports of yields better than expected in some areas, according to some traders and analysts.

 

"We would say that overall, these expectations have been as good and in many cases better than producers thought ... both here in Indiana as well as in Illinois," Risk Management Commodities senior analyst Mike Zuzolo wrote in a Thursday commentary.

 

Another trader said he has heard reports of better-than-expected yields in central Illinois. Both Zuzolo and traders cautioned that it's still very early, however, and that initial yields are often the strongest. Another analyst said he has heard reports of "variable" yields.

 

The market's next concrete fundamental news is unlikely until the U.S. Department of Agriculture releases its quarterly grain stocks report Tuesday morning, analysts said.

 

Analysts say the market is range-bound. The December contract is in a four-week-old trading range, bound by solid technical resistance at US$5.80 3/4, which is the top of a downside price gap on the daily bar chart that was created in late August, a technical analyst said.

 

Solid technical support is located at the September low of US$5.24 a bushel, the analyst said. The direction in which December corn futures prices "break out" of the aforementioned trading range is likely to be the next significant near-term price trend of the market, he added.

 

Zuzolo said there's little conviction in the market right now. The market has had trouble closing above US$5.68 in December, he said, and may remain "tame" unless it can break through that resistance.

 

CBOT oats futures ended slightly higher, but down from session highs in what a trader said was extremely light trading. December oats ended up 1 cent to US$3.35 per bushel and March oats ended up 1 cent to US$3.52 1/2.

 

Ethanol futures were slightly lower. December ethanol ended down US$0.011 to US$2.258 per gallon and January ethanol ended down US$0.008 to 2.264.