April 12, 2008

 

CBOT Corn Review on Friday: Down on profit-taking, weather concerns

 

 

U.S. corn futures fell Friday in continued profit-taking off record highs set this week, as nervous longs exited the market ahead of the weekend on shaky weather forecasts and on widespread commodity selling, brokers and analysts said Friday.

 

Chicago Board of Trade May pit-traded corn fell 10 cents to settle at US$5.84 1/4, July also lost 10 cents to US$5.97 1/2 and December was down 7 1/4 cents to US$6.04 a bushel.

 

For the week, May and July corn each lost 13 3/4 cents, while new-crop December edged down just 4 3/4 cents a bushel.

 

Forecasts suggest a drying trend in place for the Midwest near the middle of next week, but questions remain on whether the trend will remain intact long enough for producers to begin planting or whether another cool, wet weather system will affect the region. Conditions continue to be too wet and cold as most of the Midwest saw combinations of rain, thunderstorms or snow in the last 24 to 48 hours.

 

Precipitation continues to fall over parts of Iowa, Minnesota, Wisconsin, Michigan, along with southern portions of Indiana and Ohio, keeping fields too soggy for spring work.

 

"The market's certainly looking at the chance for some planting progress to get moving by next week given the forecast," said Brian Doherty, senior markets analyst at Stewart Peterson Group in West Bend, Wisc.

 

In fact, Doherty said next week will be the most "critical week of the year so far," as it will likely set the tone for upcoming weather, he said.

 

If it looks wet and cool into late April, then many traders will begin having real concerns about getting the crop in the ground and not losing yields. The corn crop needs to be planted in the heart of the Midwest by around May 5 in order to achieve trendline yields or higher.

 

On the other hand, if it begins to warm up and dry out and the planters start rolling, the wet weather concerns will be behind the market and prices will likely continue to lose some weather premium.

 

Private forecaster DTN Meteorlogix calls for mostly dry Midwestern weather Monday through Wednesday, along with warming temperatures. In the six- to 10-day outlook, rainfall is expected to average near to above normal in the western corn belt and near to below normal in the east.

 

Weak corn prices also resulted from spillover from weak soybean and wheat futures. Commodity funds were on a selling rampage Friday, and sold a net 4,000 corn contracts.

 

Friday also marked the final day of the official "Goldman roll," which saw many larger traders associated with the S&P GSCI Commodity Index, formerly the Goldman Sachs Commodity Index, exit May positions and plow them into either July or December futures.

 

In other markets, pre-weekend profit-taking and general weakness in the grains pressured CBOT oat futures, a trader says. May oats finished down 2 1/4 cents at US$3.85.

 

Ethanol futures weakened. May ethanol slipped 4 1/2 cents to US$2.48 per gallon, and June ethanol dropped 4 cents to US$2.443.