November 1, 2008


CBOT Corn Review on Friday: Down on end-of-month positioning, weather



End-of-month positioning and sunny, dry weather pushed Chicago Board of Trade corn futures lower Friday, traders said.


December corn was down 8 cents to US$4.01 1/2 per bushel and March corn was down 8 1/4 cents to US$4.19 1/4.


The losses ended a tumultuous month for corn, during which it lost 86 cents in the December contract. Prices hovered around US$4 for much of the day, and corn gained 28 3/4 cents on the week.


In addition to being the end of the month, Friday also brought selling ahead of the weekend, with traders reluctant to carry long positions until Monday given the highly volatile state of the financial system, which has been driving corn for weeks, analysts said.


It was also the end of the year for some funds, traders added.


Although the trade has not been paying much attention to the crop, there are expectations that it is getting bigger and that production estimates will climb when the U.S. Department of Agriculture releases new figures November 10. A private firm is expected to release estimates on Monday.


Weather is adding psychological pressure, said Shawn McCambridge, senior grains analyst with Prudential-Bache.


"You go outside, it's a beautiful day," he said. "You're going to see some good harvest progress this weekend."


Analysts said harvest progress reported by the USDA could be 50% to 55% Monday, which would be up from 39% the previous week. Still, the harvest is well behind average.


Lower crude oil and a higher dollar were seen weighing on the market earlier in the day. The dollar's movement drove corn throughout the week. A trader said he didn't expect it to continue to rally.


"I think it's a bounce in the dollar that's going to get sold," a trader said. "I don't think you can get too negative on commodities."


Traders and analysts add that the market is feeling pressure from weak export demand. The U.S. corn market is facing a lot of competition from other countries and from feed wheat.


October was one of the worst months for corn in many years, traders and analysts said. It was also the most volatile.


"We haven't seen this kind of volatility, ever, in the past," McCambridge said.


CBOT oats futures ended lower. December oats were down 8 cents US$2.31 1/2 per bushel and March oats were down 8 cents to US$2.49 1/4. A trader said index funds rolled out of the December contract and into March positions.


Ethanol futures were lower. December ethanol was down US$0.029 to US$1.755 per gallon and January ethanol was down US$0.050 to US$1.755 per gallon.


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