October 11, 2008

 

CBOT Corn Review on Friday: Limit down on intense outside pressure

 

 

The worldwide financial crisis pushed Chicago Board of Trade corn futures sharply lower Friday, as the market erased gains from a recent short-covering rally and ended limit down.

 

December corn was down 30 cents to US$4.08 1/4 per bushel, and March corn was down 30 cents to US$4.25 3/4.

 

Prices dropped the 30-cent limit on the open and stayed there all day. Prices were trading between US$3.93 and US$3.96 synthetically at the close, traders said.

 

Friday's crop production and ending stocks reports from the U.S. Department of Agriculture were mostly seen as bearish, although Western Milling analyst Joel Karlin said prices would have been limit down because of outside markets anyway.

 

The report showed increased corn production, with a yield of 154 bushels per acre, up from the government's September estimate of 152.3 bushels. Ending stocks also increased, with analysts noting a drop in ethanol production, which Karlin said "is in tatters."

 

Karlin said production estimates could increase even further.

 

"With this 154 yield, we could actually have a higher estimate in November, and a higher estimate in January, Karlin said.

 

But a trader noted rising world ending stocks, which he said would have, without other influences, given the market enough support to trade both sides Friday. The government projected world ending stocks at 107.76 million metric tonnes, down from 109.94 million metric tonnes the previous month.

 

Other commodities, including crude oil, soybeans and wheat, fell sharply Friday, as the trade waited in vain for signs of an end to what a trader called a "de-leveraging meltdown."

 

The trade followed equities which were highly volatile but sharply lower for much of the day. They rebounded after the corn market closed.

 

The market is plunging toward psychological support at US$4. Some traders said the market probably is nearing a bottom, although one analyst said that if prices break below US$4, there is not support in the December contract until around US$3.25.

 

CBOT oats futures ended sharply lower. December oats were down 19 cents to US$2.78 1/2 per bushel and March oats were down 14 1/2 cents to US$2.95 1/2.

 

Ethanol futures also tumbled. December ethanol was down US$0.168 to US$1.691 per gallon and January ethanol was down US$0.160 to US$1.693.