February 23, 2010

 

CBOT Corn Review on Monday: Surges on technical strength, crop concerns

 

 

Chicago Board of Trade corn futures surged Monday, climbing to one-month highs amid technical momentum and emerging crop concerns, traders said.

 

March corn ended up 11 1/2 cents to US$3.71 1/2 per bushel, and May corn ended up 11 cents to US$3.82 3/4.

 

After a slightly higher open, the market rallied strongly at mid-day, pushing past last week's highs and inspiring short-covering.

 

Traders said there was some talk about heavy rains in South America possibly hurting the crop, and about weather service predictions of spring flooding in the U.S. that could disrupt planting.

 

"I don't think it's one thing that says we should be up 12 cents," said Prime Ag Consultants analyst Chad Henderson. "I think it's more 'hey we're done going down, and if we're done going down there's some potentially bullish things on the horizon, what the hell let's bounce.'"

 

Analysts noted that traditional speculative funds were still net short in Friday's commitment of traders report from the Commodity Futures Trading Commission, which set the stage for short-covering. Funds bought an estimated 14,000 contracts.

 

Analysts also noted that weekly corn export inspections of 34.189 million bushels exceeded trade expectations and were up from the prior week.

 

A large snowpack could turn into extensive flooding as it melts in the northern Plains and the Midwest this spring, World Weather Inc. President Drew Lerner said in a report.

 

Lerner said that with anywhere from 2 to 10 inches of moisture sitting on soils from the Dakotas to Wisconsin and down into Iowa, a significant warming trend would cause a problem, particularly in the Red River Basin.

 

"The odds of having two back-to-back years of record flooding are low, but not completely out of the realm of possibility," Lerner said.

 

Lerner said the extent and depth of the snowpack is much bigger this year, and that there is also the potential for trouble in an area from southeast Indiana into much of Ohio.

 

A couple traders said concern about U.S. flooding stalling planting season is one reason grains and soy rallied Monday.

 

CBOT oats futures ended lower. March oats ended down 2 cents to US$2.28 per bushel and May oats ended down 2 cents to US$2.37.

 

Ethanol futures were higher. March ethanol was up US$0.016 to US$1.721 per gallon and April ethanol was up US$0.018 to US$1.719.