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Corn slips in choppy pre-holiday trade

11/21/2012 @ 3:09pm

U.S. corn futures fell on Wednesday, pressured by a fall in ethanol production and technical trading ahead of the Thanksgiving holiday.

Chicago Board of Trade corn futures for December delivery settled down 2 1/4 cents or 0.3% at $7.41 a bushel.



U.S. ethanol production fell 1.6% to 811,000 barrels a day last week, a four-week low, while ethanol stocks jumped 6% to 18.9 million barrels from 17.9 million, data from the Energy Information Administration showed Wednesday.

That is "not a good combination," and it pressured front-month corn by raising the question of why ethanol demand didn't keep pace with gasoline demand, said Ken Morrison, St. Louis-based publisher of the Morrison On The Markets online newsletter.

"I would not jump to any conclusions regarding the implications on longer-term corn demand for ethanol based on one week," Mr. Morrison said, "but this is a near-term negative for corn demand that bears watching closely."

Ethanol producers have struggled this year with low margins, partly because of high ethanol inventories and high corn prices.

Trading was choppy and volatile ahead of the U.S. holiday. U.S. grain markets will be closed on Thursday and will reopen for a shortened trading day on Friday.

The low volume on Wednesday led technical trading to drive prices. Corn futures settled below their 50-day moving average of about $7.45 1/4 a bushel.

"It's kind of hard to put a lot of credibility in anything that goes on" in markets during a week with a holiday market closure, said Tom Leffler, head of Kansas brokerage Leffler Commodities.

Soybean futures fell after rising on Tuesday, pressured by technical trading and an improved outlook for world soy supplies compared to several weeks ago. Soybeans fell to a five-month low last week before recovering somewhat this week.

"This $14 area is going to be something that this market has to earn," Mr. Leffler said. Expectations have improved for the U.S. soy crop, and the weather for South America's new crop is benign so far.

January soybean futures fell 4 1/2 cents or 0.3% to $14.08 1/4 a bushel.

Wheat futures ended mixed. Concerns about dry soil for winter wheat crops in the U.S. are supportive for prices, but lower corn prices weighed on wheat. Traders are also concerned about weak export demand for U.S. wheat supplies.

CBOT December wheat rose 1/4 cent, nearly flat, to $8.45 1/4 a bushel. KCBT December wheat fell 1 1/4 cents or 0.1% to $8.76 1/4 a bushel. MGEX December wheat rose 1 1/4 cents or 0.1% to $9.14 a bushel.


Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 21, 2012 15:38 ET (20:38 GMT)
DJ U.S. GRAIN AND SOY REVIEW: Corn Falls on Technical Trading->copyright


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