November 22, 2008


CBOT Corn Review on Friday: Tumbles; new lows on bearish fundamentals



Corn futures on the Chicago Board of Trade tumbled Friday, setting new contract lows as bearish fundamentals attracted speculative sellers.


December corn ended down 25 1/4 cents to US$3.38 1/2 per bushel. March corn ended down 25 3/4 cents to US$3.54 1/4 per bushel.


Fundamental influences overshadowed outside market action, with improved outlooks for the final stage of the U.S. harvest, increased rain chances for Argentina and talk of problems in the ethanol industry opening the door for the slide, said Mario Balletto, analyst with Citigroup.


The market was consumed with negativity, with technical chart pressure and the unwillingness of buyers to step in front of the defensive tonnee in the face of global economic woes keeping downside movement as the path of least resistance, analysts said.


Fears that VeraSun's bankruptcy could lead to a sharp reduction in corn consumption for ethanol sent bearish waves filtering through the market place. VeraSun Energy Corp. (VSUNQ), according to documents filed Nov. 14 in U.S. Bankruptcy Court for the District of Delaware, is seeking permission to reject corn contracts tied to two Minnesota ethanol plants, according to court documents.


They seek to establish a streamlined procedure for the future rejection of additional contracts. The filing sought relief from some ethanol sales contracts as well.


The DTN Meteorlogix weather forecast said Friday's weather models show a chance for at least some showers in the central Argentina crop-belt region during the first part of next week. On Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report 11 a.m. EST and its final weekly crop progress report of the season at 4 p.m. EST.


In pit trades, speculative fund selling was estimated at 10,000 lots.


CBOT oat futures extended losses with the other grain markets. December oats fell 5 1/2 cents to US$2.00 3/4 per bushel, and March oats lost 5 1/4 cent to US$2.16 3/4.


Ethanol futures closed lower. December ethanol slipped 6.5 cents to US$1.578 per gallon, and January ethanol dropped 5.8 cents to US$1.563.


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