November 19, 2008

 

CBOT Corn Review on Tuesday: Dips amid lack of bullish news

 

 

Chicago Board of Trade corn futures ended lower Tuesday, as the market drifted amid a lack of bullish fundamental news, traders said.

 

December corn ended down 5 3/4 cents to US$3.80 per bushel, March corn ended down 6 1/2 cents to US$3.96 1/2 and May corn ended down 7 cents to US$4.07 3/4.

 

The market has settled into a range, traders said. It has not re-tested its low last week of US$3.60 1/4, yet weak demand and concerns about the world's economy have put a lid on upside potential, analysts said.

 

"As the turmoil in world financial markets has calmed, at least temporarily...it's allowing corn to catch its breath, which is what we're doing, considering how long we've been sideways," says John Kleist, broker/analyst with Allendale.

 

Since Oct. 10, December corn has traded between US$4.33 and US$3.60. That range has been more narrow since Nov. 6, with the contract trading between US$3.91 1/2 and US$3.60.

 

The sideways trading trajectory is prompting some traders to believe a harvest low is in place, which is prompting short-covering, an analyst said.

 

But Kleist said that technically the market still shows "signs of erosion."

 

The slow pace is the harvest is providing at least some psychological support, many traders said. The USDA on Monday reported 78% of the crop was harvested, down from an average of 94%. Analysts say there are concerns about damage to the crop the longer it remains in the field.

 

But other traders said the slow harvest should only provide minimal support, particularly since the U.S. corn belt is expected to have several days of dry, cold weather.

 

Export demand remains very weak, analysts said. Otherwise there is little news in the market, and corn continues to track outside influences, such as crude oil and equities, which added pressure, a trader said.

 

CBOT oats futures ended unchanged for the second day in a row. December oats were flat at US$2.15 1/2 per bushel and March oats were steady at US$2.31.

 

Ethanol futures were lower. December ethanol ended down US$0.009 to US$1.688 per gallon and January ethanol ended down US$0.009 to US$1.690.