November 6, 2008


CBOT Corn Review on Wednesday: Falls on fund sales, bearish commodities



Chicago Board of Trade December corn futures tumbled 5.5% Wednesday on widespread commodity weakness linked to heavy losses in crude oil that caused speculative fund sales nearly across the board, brokers and analysts said.


Most-active December corn fell 22 3/4 cents to settle at US$3.90 1/4 a bushel, and March lost 22 3/4 cents at US$4.08 a bushel.


Also ideas that Tuesday's Election Day rally may have been overdone led to selling interest in commodities, along with nearly 3% losses on Wall Street.


"We've seen a post-election reaction in the market," said Boyd Baker, analyst at IRA Epstein in Chicago.


Corn futures rose to three-week highs Tuesday, so part of the weakness was tied to a technical retracement as well, a trader said.


December corn fell to a US$3.90 session low, breaching the psychologically important US$4 area but still holding key support right at US$3.90, said Baker.


In addition, ideas the market may have bottomed last week lent light support to corn and may have kept prices from posting steeper losses.


Funds sold an estimated 4,000 corn contracts on the day.


Midwestern producers have seen a stretch of dry weather with much-above-normal temperatures that have aided harvest efforts previously slowed by cool, wet conditions. The dry pattern is rapidly ending, however, as scattered rains move across parts of Iowa and a winter storm system gathers strength over the Dakotas and parts of northwestern Nebraska.


Parts of south-central North Dakota and central South Dakota could see up to a foot of snow by Friday, Joel Widenor and Bob Hass of Cropcast Agricultural Weather said. The most serious threats of snow are expected to be held to the far northwestern edge of the Midwest, they said.


Still, Midwestern producers will have to deal with a drop in temperatures and rainy periods over the next several days as the system moves east to west, complicating harvest efforts, a trader said.


CBOT oat futures closed lower with the rest of the grain floor. December oats dropped 7 cents to US$2.38 a bushel, while March oats lost 7 1/2 cents to US$2.55.


Ethanol futures were mixed. November ethanol rose 3.6 cents to US$1.879 per gallon, and December ethanol slipped 5.3 cents to US$1.768.


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