October 4, 2008

 

CBOT Corn Review on Friday: Fails to hold daylong gains, ends flat

 

 

Chicago Board of Trade corn futures ended flat Friday, as the market relinquished gains it had held most of the day on late selling.

 

December corn ended unchanged at US$4.54 a bushel, and March corn ended down 1/2 cent at US$4.72 1/2.

 

Prices had been several cents higher for most of the day. But as has been the case throughout the week, late selling pushed the market lower before the close. Newedge and UBS sold 800 contracts near the close, and JPMorgan sold 1,000, a trader said.

 

Throughout the day the trade awaited a vote on a financial-sector bailout package by the U.S. House, which passed the bill, easing fears of an intensifying financial crisis and another wave of liquidation.

 

"What it means for grains is hopefully we don't have that hanging over our head all the time," said Jerry Gidel, analyst for North America Risk Management Services.

 

Still, prices fell several cents in late trading, following equities.

 

Traders said corn could go back to trading on fundamentals, although concerns about a global recession and easing commodity demand will continue to apply pressure.

 

Gidel said approval of the bailout could bring back into focus issues such as weak demand, weather forecasts and yield reports.

 

"Hopefully we'll get back to looking at these things," Gidel said, adding that "volatility should wane some."

 

A trader said approval of the package wouldn't spark a rally since fundamentals were unfavorable anyway. Good crop weather during the past month, including the absence of any significant frost, is helping the crop reach its full potential, analysts said.

 

Private analytical firm Informa Economics on Friday estimated the 2008-09 U.S. corn crop will total 12.219 billion bushels, with a yield of 154.1 bushels per acre.

 

The estimates are below Informa's September estimates, but up from the U.S. Department of Agriculture's latest projections. The USDA in September pegged production at 12.072 billion bushels and yield at 152.3 bushels per acres.

 

Prices were higher for most of the day amid short-covering in an oversold market, traders said. The December contract fell 16.4% on the week.

 

In other markets, CBOT oats futures were higher. December oats ended up 4 cents at US$3.14 a bushel, and March oats were up 4 1/4 cents at US$3.31 1/2.

 

Ethanol futures were mixed. December ethanol ended up US$0.004 at US$1.989 a gallon, and January ethanol ended down US$0.006 at US$1.975.