November 26, 2008
CBOT Corn Review on Tuesday: Dips slightly; outside markets, demand weigh
Outside market pressure and weak demand pushed Chicago Board of Trade corn futures slightly lower Tuesday, traders said.
December corn ended down 1 cent at US$3.53 1/2, March corn ended down 1/2 cent at US$3.70 1/2, and May corn ended down 1/2 cent at US$3.81 3/4.
Following strong gains Monday, the market opened lower Tuesday and stayed there throughout the day, unable to "find its legs" amid a weak demand picture and uncertain outside markets, analysts said.
"It's almost like today's a consolidation from yesterday's consolidation from the previous day," said John Kleist, broker and analyst for Allendale in McHenry, Ill. "That's what it looks like on a chart."
The grain markets in general are taking a "wait and see" attitude as traders wonder if the dollar will continue its recent setback, if crude oil will hold above US$50, and if the Dow will hold above 8,000, said Jerry Gidel, analyst for North America Risk Management Services.
Lower crude oil weighed on corn for much of the day, traders said.
Traders' caution is heightened ahead of the Thanksgiving holiday on Thursday, analysts said. The market will be closed Thursday and will close an hour and 15 minutes early Friday. Light trade is expected, but the thinly traded market could be prone to significant price swings, analysts said.
A couple of analysts expect corn to show strength both the day before and after the holiday. Historically, the market has a tendency to climb the day before Thanksgiving, one analyst said.
But the market continues to show "signs of erosion," Kleist said, due to "continuous disappointments from the demand side." Export sales have been weak, and troubles in the ethanol industry are also weighing on corn demand, he said.
Kleist and other analysts said the abundance of feed-quality wheat in the market is a big obstacle for corn bulls to overcome.
Traders noted favorable weather in the U.S. corn belt for harvest, as well as sorely needed rains forecast for Argentina, where hot, dry weather has threatened the crop.
Although the U.S. Department of Agriculture reported good harvest progress on Monday, Gidel said that with 89% of the harvest completed, there are still approximately 1.4 billion bushels of corn still in the fields. That remaining crop could be threatened if a wet snow hits the corn belt, analysts said.
CBOT oats futures ended lower. December oats were down 2 1/4 cents at US$2.03 1/4 per bushel and March oats were down 2 1/2 cents at US$2.19 1/2.
Ethanol futures were lower. December ethanol was down US$0.035 at US$1.607 per gallon and January ethanol was down US$0.024 at US$1.599.