March 27, 2008

 

CBOT Corn Review on Wednesday: Extends ascent on spillover, fundamentals

 

 

Chicago Board of Trade corn futures ended higher Wednesday, continuing its ascent from prior losses on spillover strength from soybeans, supportive outside influences and bullish underlying fundamentals.

 

May corn settled 7 1/2 cents higher at US$5.52 1/4, July corn ended 8 cents higher at US$5.65, and December finished 8 3/4 cents higher at US$5.68 1/2.

 

The market remained in a recovery mode, climbing back from last week's sharp declines on the backdrop of friendly long-range underlying outlooks, analysts said.

 

Outside market forces aided the higher tonnee as well, with weakness in the U.S. dollar making commodities priced in dollars more attractive in world markets, analysts added.

 

Speculative money flowing back into the market served as a driver of the market, with rising commodity prices in general helping attract speculative buyers, traders said.

 

However, corn has a strong fundamental base, with strong demand and outlooks for smaller 2008 U.S. planted acreage promoting a bullish psychology in the market, traders added.

 

Lingering concerns surrounding the potential for early planting delays as a result of heavy rains and flooding in the southern Midwest provided fundamental support to buoy prices as well, a CBOT floor analyst said.

 

On tap Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Trade estimates put corn export sales at 600,000 to 900,000 metric tonnes.

 

USDA is slated to issue its prospective plantings estimates Monday. The average of analysts' estimates from a survey by Dow Jones Newswires project U.S. corn plantings to drop by 6.2 million acres to 87.387 million, down from 93.600 million seeded in 2007.

 

Meanwhile, the DTN Meteorlogix forecast said light rain showers will move south from the western Midwest into the southern Midwest and Ohio Valley. This moisture will be heaviest in the southern Midwest - keeping very wet soil moisture conditions in place over that sector of the region. However, this light shower activity will only be the start of a heavy late-week weather trend over the southern half of the Midwest.

 

Thursday's DTN Meteorlogix outlook is much wetter. The central and southern Midwest - from eastern Iowa through central Illinois and south to the Missouri Bootheel and the Ohio Valley - has possibly heavy rain of up to 2 inches in store. This overall wet weather pattern will lead to further delays in spring field work for the majority of the U.S. Corn Belt, Meteorlogix reports. In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 5,000 lots.

 

CBOT oat futures closed higher amid electronic buying that was thought to be fund-related, a floor trader said. There also was spillover support from gains in CBOT soybeans and corn, he added. May oats rose 10 1/4 cents to US$3.44 1/4.

 

Ethanol futures ended higher. April ethanol jumped 4.3 cents to US$2.493 per gallon, and May ethanol ended up 3.3 cents at US$2.445.