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Corn, soy close limit down

Updated: 11/12/2010 @ 1:40pm

CHICAGO, Illinois (Agriculture.com)--China's proposal to raise its interest rates to slow inflation sinks the CME Group corn and soybean markets to their daily low limit Friday.

The Dec corn futures settled down the 30 cents limit at $5.34. The Jan. soybean contract settled at its daily 70 cent low limit at $12.69. The Dec. wheat futures closed 34 3/4 cents lower at $6.69 1/4.  The Jan. soymeal futures contract closed $18.40 lower at $341.70 per short ton. The Jan. soyoil futures contract closed $2.50 lower at $52.85.

In the outside markets, the NYMEX crude oil is $2.80 per barrel lower, the dollar is lower, and the Dow Jones Industrials are down 111 points.

Anne Frick, Prudential Bache Commodities LLC oilseeds analyst, says the sell-off was inevitable. "The sell-off was probably needed and to some extent is also seasonal (after a post-harvest advance in soybeans), so if not China, there may have been some other triggering factor to change the market psychology on a short-term basis and put the market back into an area where the upside potential is large enough versus downside risk (usually a 2.5:1 ratio) to bring in fresh speculative buying."

Jack Scoville, PRICE Futures Group vice-president, says Friday's market rewind had everything to do with China's announcement. "It started just after 7pm Thursday and the market went from firm to down in a matter of minutes, and the selling has been fairly constant since then. Most of this seems to be spec selling. Probably fund selling.  

Scoville adds, "I have seen consumptive buying in the corn on the way down, and I am advising some of the user side to lock in some prices as well. The last time there were fears of Chinese interest rate increases we trashed like today and then bounced hard after that, so such a move is possible next week."

Scoville has price targets down to $12.50 in Jan soybeans and $5.40 in December corn. "I would tend to think whatever selling develops on Sunday night/Monday would hold somewhere around there.  It is a good thing it is Friday as traders will now have a weekend to decide on their next moves.  Pretty wild way to end the week for sure," Scoville says.

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Is Hannigan selling with both barrels? 11/12/2010 @ 9:58am Mornng Mike, Did you get to talk to hannigan on his take on the market's direction for today?

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