April 23, 2008

 

CBOT Corn Review on Tuesday: Rallies on fund buying, planting delays

 

 

U.S. corn futures rallied amid speculative-led buying tied to gains in key inflationary markets and on concerns over Midwestern planting delays, analysts said Tuesday.

 

May corn at the Chicago Board of Trade rose 14 cents to settle at US$5.94 1/4, July was also up 14 cents at US$6.07 3/4, and December added 13 3/4 cents to end at US$6.19 a bushel.

 

"We had a planting progress report that was below expectations," said Doug Harper, analyst at Brock Associates in Milwaukee.

 

Corn opened higher on news that U.S. plantings were just 4% complete as of Sunday, up from 2% the previous week but well behind the average pace of 18%.

 

Iowa, Indiana and Ohio producers hadn't even begun planting because of wet conditions, while only meager seedings were reported in Nebraska and Illinois. Missouri farmers had planted 4% of the corn crop, which is more than three weeks behind the average pace.

 

Showers passed over parts of the western and central belt Tuesday, but dissipated over central Illinois, keeping those areas moist. Another rainmaker is expected to affect the Midwest on Sunday and continue through Tuesday of next week, bringing rains in excess of 0.50 inch for nearly all of the major corn-producing states, except for the Dakotas and western Plains, private forecaster T-storm Weather said.

 

"The real trigger from a fundamental perspective for corn was the weather forecast. The rains are close enough together that it's not going to allow a lot of fieldwork - the western and central corn belt with probably have the least opportunity for fieldwork," said Harper.

 

Early seedings are especially important this year as farmers need to plant in excess of 86 million acres in order to placate demand and prevent stocks from shrinking to worrisome levels, analysts have said.

 

"With next year's corn stocks figure seen declining sharply, certainly end-users are hoping that another 1 million to 3 million acres of corn will be found," said Joel Karlin, analyst at Western Milling Quality Feeds.

 

Early plantings are normally associated with trend or higher yields, he said.

 

Plantings are expected to exceed the currently estimated 86 million acres, which would be an 8% decline from last year, though weather conditions will be the key determinant, said Gerald Bange, chair of the USDA's World Agricultural Outlook Board.

 

In addition to the weather forecasts and planting delays, record highs in crude oil and a rally in precious metals also sparked buying interest in the CBOT grain and soybean pits. Ahead of the market close, large funds had purchased an estimated 5,000 corn contracts.

 

CBOT oat futures finished higher in a general grains rally, a trader said. July oats jumped 6 3/4 cents to US$3.89 3/4 per bushel.

 

Ethanol futures ended firmer. May ethanol rose 2.6 cents to US$2.566 per gallon, and June ethanol gained 2.3 cents to US$2.503.