April 24, 2009

 

CBOT Corn Review on Thursday: Higher on wet forecasts, export sales

 

 

Chicago Board of Trade corn futures finished higher Thursday amid increased concerns about more rainfall headed to the U.S. corn belt.

 

May corn ended up 7 1/2 cents to US$3.81 per bushel, July corn ended up 7 1/2 cents to US$3.90, and December corn ended up 8 1/4 cents to US$4.11 1/2.

 

Floor traders noted that mid-day weather forecasts showed increased rainfall next week, with several inches in some corn-growing areas, including parts of central Illinois. He said the forecasts might have helped shake off the market's "complacency" and weather delays.

 

"That means more delays, and significant ponding," the trader said.

 

The weather concerns gave further support to a market that was already firm because of strong weekly export sales reported Thursday. A couple of analysts said the U.S. Department of Agriculture may have to increase its current export estimate thanks to the continued strong sales above 1 million metric tonnes.

 

That would drag U.S. corn ending stocks for 2008-09 below 1.7 billion bushels, the trader said. Fund money came into the corn market on ideas that the corn balance sheet could tighten, he said. Funds bought an estimated 6,000 contracts.

 

Traders added that unwinding of corn-soybean spreads factored into corn's gains.

 

Although export demand has been strong, problems with feed and ethanol demand persist.

 

The trade is eyeing California for an expected decision on a new standard that would include land-use changes in ethanol's environmental impact. The state's air resources board was holding a public hearing on the matter Thursday.

 

The decision, while not seen having an immediate impact on usage, is considered a potentially important gauge of government support for ethanol.

 

Standard Chartered noted in a research note Thursday that it "is becoming apparent that a hike in ethanol mandates will not be an easy sell due to strong opposition from the anti-ethanol lobby," and said resistance for corn should continue around US$4 during the next month or two.

 

CBOT oats futures shot higher Thursday, with support from an anticipated cut in plantings by Stats Canada on Friday, the trader said. The trader said a small private survey found expectations that the Friday report would show seedings down 16% to 17% this year, although he noted others think the decline will be closer to 11%.

 

May oats ended up 11 3/4 cents to US$1.94 per bushel and July oats ended up 12 cents to US$2.03.

 

Ethanol futures were higher. May ethanol ended up US$0.018 to US$1.560 per gallon and June ethanol ended up US$0.010 to US$1.565.