October 22, 2008


CBOT Corn Review on Tuesday: Lower on outside markets, profit-taking



Slumping outside markets sent Chicago Board of Trade corn futures lower Tuesday, although underlying technical support limited the losses, traders and analysts said.


December corn was down 7 1/2 cents to US$4.11 per bushel and March corn was down 8 1/2 cents to US$4.27 3/4.


A stronger dollar set the stage for drops in various commodities, including crude oil and other grains, which weighed on corn, traders said. There was also light profit-taking after a couple days of gains, traders said. But corn appeared to have more support than other grains, an analyst said.


The market should have solid support at US$4, traders said. Allendale broker/analyst John Kleist said Monday's low of US$4.06 1/2 in December was just as important support. The market dropped within 1/4 of a cent of that price, but did not dip below.


"If we had fund-buying yesterday, the funds are now defending their positions," Kleist said.


Volume has remained low in the market, analysts said, as farmers are reluctant to sell at prices that have been cut almost in half from their June highs.


"Farmers aren't selling anything," said Sid Love, analyst with Kropf & Love. "The only thing moving in here is forward-contracted stuff."


The market continues to track outside influences, but the crop's harvest is also getting attention from traders. Wet weather forecast for the western U.S. corn belt could delay harvest and offered support, analysts said. Kleist mentioned that potential snow in Nebraska added psychological support to the market.


But Love also noted that many believe yields so far have been better than expected, potentially cancelling out the support from the weather.


Both Kleist and Love noted that some believe the market's seasonal lows have been set. The market dropped as low as US$3.71 last week in the December contract.


CBOT oats futures ended lower. A trader said farmers are reluctant to sell at these low prices, but that demand remains weak. December oats ended down 11 cents to US$2.77 per bushel and March oats ended down 10 1/2 cents to US$2.94 1/2.


Ethanol futures were lower. December ethanol ended down US$0.057 to US$1.733 per gallon and January ethanol ended down US$0.072 to US$1.740.


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