November 20, 2008


CBOT Corn Review on Wednesday: Creeps lower amid tightening trade range



CBOT corn futures ended slightly lower Wednesday on pressure from equities, as the market trades within a tightening price range, traders said.


December corn ended down 1 1/4 cents to US$3.78 3/4 per bushel and March corn ended down US$3.95 1/4.


The market continues to track outside markets, traders said, although corn dropped modestly despite a sharp drop in equities. U.S. stocks were a couple hundred points lower throughout the day.


The trade has already entered a quiet, pre-holiday mindset, traders said, with December options expiration on Friday adding to the urge to consolidate.


When the market opened higher and climbed to about US$3.85 in the December contract, 25 cents higher than last week's low, the trade asked "how much do we need to get ahead of ourselves right now?" said Chad Henderson, analyst for Prime Ag Consultants.


December corn traded as high as US$3.85 and low as US$3.75 during the session, above last week's low of US$3.60 1/4.


"The corn market has been in a trading range this fall and that range is getting tighter, suggesting we could see a breakout to either the upside or downside," the Linn Group said in a market commentary.


Looking forward, Henderson said the only bullish factor is that farmers "are tight holders of grain, and commercials are very small holders of grain right now."


Very weak export demand is keeping a lid on the market, analysts said. Ideas that the market has found its bottom are limiting downside movement, an analyst said. Concerns about the slow pace of the harvest is also adding underlying support, according to some traders, although others disagree.


As of Sunday, only 78% of the crop had been harvested, compared to an average of 94%, the USDA said.


"When everything is so negative, I don't think it's a big deal," Henderson said.


CBOT oats futures ended slightly higher. December oats ended up 3/4 cent to US$2.16 1/4 per bushel and March oats ended up 1 cent to US$2.32.


Ethanol futures were lower. December ethanol ended down US$0.001 to US$1.687 per gallon and January ethanol ended down US$0.015 to US$1.675.


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