December 19, 2008


CBOT Corn Review on Thursday: Bounces late on wheat to end flat



CBOT corn futures ended steady to slightly lower Thursday, rebounding late on spillover support from wheat, traders said.


March corn ended unchanged at US$3.89 1/2, May corn ended down 1/4 cent to US$4.00 1/4, and July corn ended down 1/4 cent to US$4.10 3/4 per bushel.


The market had been mired about 5 cents lower most of the day, but climbed late.


"The acceleration of wheat into new highs was a major factor" in corn's late bounce, a trader said.


The trader and an analyst said the corn market appears to be in a range between US$3.80 and US$4 per bushel.


"I think we're range-bound in the corn primarily, held up by the wheat and the South America weather, but contained by the weaker crude, weaker equities and stronger bonds," said Mike Zuzolo, senior analyst for Risk Management Commodities.


The "intraday correlation" between grains and outside markets appears to be waning, a trader said, noting that corn limited its losses and bounced late despite crude oil's continued descent, below US$40.


Demand remains weak, and corn's recent rally in the face of crude's weakness has raised more concerns about the viability of ethanol producers, traders said. Weekly export sales reported Thursday were weak, adding to the pressure on corn, analysts said.


The market continues to eye weather in South America, with dry weather a concern for the crop in Brazil and Argentina. Concerns about the corn and soybean crops there, along with worries about the U.S. wheat crop given the harsh weather in the Midwest, are supportive for the grains, Zuzolo said.


"All of a sudden you start talking about the global feed grains taking a supply side hit, and I think that's what starting to resonate in the minds of traders, especially with the [recent] break in the dollar," Zuzolo said.


CBOT oats futures ended unchanged. March oats settled at US$2.22 per bushel and May oats settled at US$2.31.


Ethanol futures settled lower. January ethanol ended down US$0.019 to US$1.573 per gallon and March ethanol ended down US$0.027 to US$1.588.


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