March 29, 2008

 

CBOT Corn Review on Friday: Bounce from losses on bullish acres talk

 

 

Chicago Board of Trade corn futures ended higher Friday, rebounding from earlier session losses on bullish acreage outlooks for Monday's plantings report and supportive underlying fundamentals.

 

May corn settled 5 cents higher at US$5.60 1/2, July corn ended 6 1/2 cents higher at US$5.73 3/4, and December finished 8 1/4 cents higher at US$5.76 3/4.

 

The general consensus in the market calls for a significant drop in corn acreage from 2007 with demand not expected to falter, and this is maintaining a bullish psychology in the market, analysts said.

 

Spillover weakness from neighboring grains and soybeans weighed on futures for most of the day, with a firmer U.S. dollar and a drop in crude oil and metal futures adding pressure, analysts added.

 

However, as the day unfolded futures bounced from negative territory, buoyed by lingering worries of early planting delays due to wet, cool Midwest weather and outlooks for a reduction in corn areas in 2008, a CBOT floor analyst said.

 

New crop futures gained at the expense of old crop contracts, with bear spreads widening as traders start to shift their attention to new crop fundamentals, he added.

 

The U.S. Department of Agriculture is scheduled to release its 2008 U.S. prospective planting report Monday at 8:30 a.m. EDT. A Dow Jones Newswires survey of 22 analysts saw a range of forecasts between 85.7 million and 89.8 million acres, putting the average at 87.387 million. These are all down from the 2007 record corn seedings of 93.6 million acres.

 

Goldman Sachs forecast Friday that U.S. corn acreage will fall 10.2% in 2008 to 84.1 million acres, much lower than the average industry estimate.

 

Meanwhile, the DTN Meteorlogix forecast said except for the far western sector of the corn belt, central Nebraska through northern Kansas, and north into south-central South Dakota, a combination of unseasonable wintry precipitation, moderate to heavy rain and below-normal temperatures will continue to stymie fieldwork across the entire belt going into the first part of April. This delay is becoming very worrisome to both producers and end users of corn because of the fear of corn either being planted late or in some cases corn acres being switched to soybeans for the 2008 crop year.

 

Total rainfall through next Wednesday will run as high as four inches in some areas of the Midwest. This will bring new flooding and fieldwork concerns, Meteorlogix reports.

 

In pit trades, buyers and sellers were scattered among various commission houses.

 

Oat futures closed higher on fund buying off of a rally in corn, a floor trader said. May oats jumped 15 1/2 cents to US$3.60 1/4 per bushel.

 

Ethanol futures slipped. April ethanol stumbled 1.4 cents to US$2.483 per gallon, and May ethanol dropped 0.4 cent to US$2.448.