November 29, 2008


CBOT Corn Review on Friday: Ends lower; demand, outside markets pressure



A stronger dollar and lower crude oil sent CBOT corn futures lower in a truncated post-holiday trading session, traders said Friday.


December corn ended down 4 1/2 cents to US$3.49 1/2 per bushel, March corn ended down 5 1/4 cents to US$3.65 3/4 and May corn ended up 5 cents to US$3.77 1/4.


There was no news to spark a rally in corn, and outside markets set the tonnee, traders said.


"The dollar is stronger, so the commodities world is going to be weaker," a trader said. Others noted that crude oil was lower throughout the day.


Export sales were "not too spiffy," said Joel Karlin, analyst for Western Milling. The U.S. Department of Agriculture reported sales of 465,400 metric tonnes, within trade estimates. Karlin said export sales are about 50% off the pace set a year ago.


Troubles in the ethanol industry and an abundance of cheaper feed-quality wheat has dampened demand for corn, analysts said.


Heavy deliveries reported on first notice day weighed on the market, analysts said. Traders said the commercial funds are willing to give up ownership of the receipts without worrying about replacing the grain.


The market got no support from the weather, with crucial rainfall falling in Argentina, where conditions have been hot and dry.


Even with Friday's losses, the market still closed higher for the week. December corn ended 11 cents higher on the week and March corn ended 11 1/2 cents higher. The contracts had set their seasonal lows last Friday.


Despite the stability in outside markets and strength in U.S. equities, corn has been unable to surge above its 10-day moving average this week, and there are mixed views about whether the market has set its bottom for the year.


Karlin expects the market will continue to track outside markets in December, but will begin to focus more closely on its own fundamentals in January. Eventually the trade will face up to the prospect of flat or reduced acreage next year if prices don't rise to encourage more planting, Karlin said.


CBOT oats futures ended higher. December oats ended up 2 cents to US$2.01 1/2 per bushel and March oats ended up 2 cents to US$2.17.


Ethanol futures ended higher. January ethanol was up US$0.036 to US$1.659 per gallon and March ethanol was up US$0.010 to US$1.650.


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