November 6, 2009

 

CBOT Corn Review on Thursday: Ends lower on harvest weather, soy

 

 

Chicago Board of Trade corn stumbled Thursday, ending lower on good harvest weather, farmer selling and slumping soy.

 

December corn ended down 7 1/2 cents to US$3.76 1/2 per bushel, and March corn ended down 7 1/4 cents to US$3.90 1/4.

 

The market sank amid widespread commodity selling, as funds sold 7,000 contracts. Soy in particular fell sharply, by almost 30 cents.

 

The weather is bearish for the market, as warm, dry weather is expected to continue throughout the U.S. Midwest into next week. But many producers are getting their soy first, and the harvest pressure is not as intense for corn, analysts said.

 

"The open weather window is still there, but harvest is dragging along so slowly, and elevators are shutting down enough during the daytime," Mike Zuzolo, president of Global Commodity Analytics and Consulting, said.

 

The elevators are shutting down because there is more wet corn than they can handle. While keeping some corn from getting into the pipeline, some traders also note the possibility that farmers with corn of questionable quality are likely to sell their grain as soon as possible rather than storing it and risking further deterioration.

 

With harvest underway and a large crop expected, the market's upside is seen as limited unless outside macro markets give it another boost.

 

The market lacked the outside support that had provided much of the recent strength, as the dollar was firm and crude oil slipped.

 

After climbing 24 cents the first two days of the week, December corn has lost 13 1/2 cents the past two days.

 

The trade is looking ahead to Tuesday's supply and demand report and updated crop estimates. On average, analysts are expecting the U.S. Department of Agriculture to peg the corn crop at 12.995 billion bushels, down just slightly from the USDA's October estimate of 13.018 billion bushels.

 

Some traders say it could be well after the Tuesday report before the trade knows the full truth about the crop, due to quality issues.

 

CBOT oats futures ended lower. December oats ended down 2 1/4 cents to US$2.55 3/4 per bushel and March oats ended down 2 1/2 cents to US$2.69.

 

Ethanol futures inched higher. December ethanol ended up US$0.001 to US$1.867 per gallon and January ethanol ended up US$0.002 to US$1.845.