April 4, 2008

 

CBOT Corn Review on Thursday: Funds, weather lift corn to records

 

 

Corn futures at the Chicago Board of Trade reversed from early weakness to close at record highs, after commodity funds turned selling interest into buying and traders remained concerned about another round of rains moving through parts of the corn belt, traders and analysts said Thursday.

 

Nearby pit-traded May corn rose 4 1/2 cents to settle at US$6.00 for the first time ever, after setting a high of US$6.02 1/2 earlier in the session. July gained 4 1/4 cents to US$6.13 1/2, topping out at a record US$6.15 earlier, and December made the most gains, up 7 1/4 cents to settle at US$6.10 1/4, down slightly from its record high of US$6.12 a bushel.

 

"The fundamentals are going to rule the day here, and certainly the weather outlook as well," said Boyd Baker of IRA Epstein in Chicago.

 

Expectations for 8% fewer planted acres than last year due to high input and fuel costs, as well as crop-rotation considerations, continue to put a price-friendly floor underneath the market. A tightening stocks situation solidifies the bullish trend as some analysts worry corn may drop to worrisome levels by August or September.

 

In addition, bullish traders attempted to keep pace with the rise in soybean futures in order not to lose more ground in the battle for planted acres.

 

"For them to try and steal acres away from beans they're targeting the US$6.25-US$6.50 area. Six dollars was a hurdle we were trying to combat ... so we'll probably spend some time at these levels, but I think eventually we can push through this thing," Baker said.

 

Funds bought an estimated 3,000 corn contracts on a net basis.

 

In addition, rainy weather moving across western and southern areas of the Midwest continues to spark concerns that early plantings in the southern belt could be delayed if the current weather pattern doesn't break soon. While it is early, a pattern of wet weather remains worrisome, a trader said.

 

Weekly export sales for the week to March 27 came in just above expectations to total 945,700 metric tonnes, which may be supportive for prices, a trader said. Analysts had expected sales of 500,000 to 900,000 tonnes.

 

Sales for the 2007-08 marketing year totaled 704,400 tonnes and were up 11% from the previous week but just 1% above the prior four-week average, the U.S. Department of Agriculture reported, while 2008-09 sales reached 241,300 tonnes.

 

Corn shipments totaled 1,145,600 tonnes, down 11% from the previous week and the prior four-week average.

 

Meanwhile, CBOT oat futures came under pressure from commercial hedging, a floor trader said. May oats finished unchanged at US$3.97 per bushel, and July oats dropped 1 1/4 cents to US$4.06.

 

Ethanol futures closed mixed. April ethanol slipped 1.5 cents to US$2.508 per gallon, and May ethanol gained 2.7 cents to US$2.507.