November 12, 2008


CBOT Corn Review on Tuesday: Ends lower on bearish outside influences



Bearish equities, lower crude oil and a higher dollar teamed to send CBOT corn futures lower Tuesday.


December corn ended down 9 1/4 cents to US$3.74 1/4 per bushel March corn ended down 9 3/4 cents to US$3.91 3/4 per bushel.


Concern about the global economy sent the market plunging at the open, and although it trimmed its losses, corn remained in negative territory all day. A drop in the U.S. stock market, lower crude oil and a stronger dollar weighed on the market, traders said.


"With all of the concerns that surround outside markets, it seems like the path of least resistance has been, and will continue to be lower," says Shawn McCamrbidge, senior grains analyst with Prudential-Bache.


Although corn fell below its October low of US$3.64 in the December contract, the market recovered slightly. A close below that low would have been a bearish technical signal, analysts said.


A trader said the outside market influence was nothing new, and that equities' continued fall has made investors skittish. "People are concerned with the next leg down in the stock market," he said.


Analysts said there is little to indicate any rebound in demand soon. Exports have remained low despite historically low freight rates, McCambridge said, and low sales even during harvest indicates either that end-users aren't concerned about any rally in the market, or that the demand simply isn't there.


Demand remains weak due to economic woes and the competitive presence of feed wheat, analysts said. A large world wheat crop includes significant amounts of low-quality feed wheat, analysts say.


After concerns about a grain shortage this spring and early summer, "it now seems like we're swimming in it," a trader said.


The market had minor support from the weather, which threatens to further delay harvest this week, particularly in northern reaches of the corn belt, analysts said.


CBOT oats futures ended flat, with the December contract settling at US$2.36 per bushel and March oats at US$2.51 1/2.


Ethanol futures were lower. December ethanol ended down US$0.065 to US$1.672 per gallon and January ethanol ended down US$0.069 to US$1.670.


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