April 5, 2008

 

CBOT Corn Review on Friday: Down slightly on pre-weekend profit-taking

 

 

Chicago Board of Trade corn futures gave back a small portion of this week's gains as the market became overbought and traders decided to book profits ahead of the weekend, traders and analysts said Friday.

 

Nearby pit-traded May corn fell 2 cents a bushel to settle at US$5.98, and December lost 1 1/2 cents to settle at US$6.08 3/4.

 

"We just got a little top-heavy here, and we've had real good gains this week, but there's really nothing new as far as fundamental issues," said Shawn McCambridge, senior grains analyst at Prudential-Bache.

 

Corn prices reached record highs Thursday, as they battled for planted acreage with soybeans. Soybeans, however, continued their rally Friday as they attempt to find favor with producers at planting time. Both crops are in a struggle to secure acres in a period of increasing demand and tightening stocks.

 

Despite Friday's modest losses, corn made impressive weekly gains, as May was up 37 3/4 cents from last Friday's settlement.

 

Efforts to siphon demand amid tightening stocks and strong usage or to secure acres from soybeans have bolstered prices, analysts said. Monday's quarterly stocks and planting intentions reports were bullish for corn and showed demand for ethanol and livestock feed have been stronger than anticipated. Producers are now concerned they won't grow enough corn to meet demand for the 2008-09 season.

 

After strong fund action in recent days, funds only bought a net 1,000 contracts Friday, a trader said.

 

Traders are now setting their sights on Wednesday's release of the USDA's March supply and demand reports to see if corn stocks continue to tighten now that the first acreage estimate of 86 million, down 8% from last year, has been made public this week.

 

Corn market participants continue to key on weather forecasts for any possible changes to the current cool, wet outlooks.

 

"I think we're in a pattern now that you're going to see now through the harvest ... that when you have good weekly gains you're going to have some of the longs get a little nervous and not want to carry positions over the weekend on concerns the weather forecasts could change significantly and catch them on the wrong side of the market," McCambridge said.

 

Forecasts point to a cycle of wet conditions for much of the Midwest, particularly for southern locations.

 

While there is still time, farmers in the heart of the corn belt have until May 5 to plant before yield losses are a concern. Producers in more southern areas, however, would like to be in the fields by now.

 

On Friday and Saturday, a swath of heavy rain will shift into the South and East and residual flooding will persist from the mid-South into the Ohio Valley. The threat for severe storms will shift from the lower Mississippi Valley to the southern Atlantic Coast, USDA Meteorologist Brad Rippey said.

 

Precipitation will also spread from the Pacific Northwest to the upper Midwest, with heavy snow possible this weekend in the upper Great Lakes. Wet weather will return to the central Plains and parts of the Midwest early next week, with additional flooding possible in the Midwest.

 

In other markets, CBOT oat futures fell amid a lack of fresh news and buying interest, a floor trader said.

 

"You've got to have a story to get off the ground," he said. May oats ended down 11 1/2 cents at US$3.85 1/2.

 

May ethanol edged US$0.009 higher to US$2.516 per gallon.