April 26, 2008

CBOT Corn Review on Friday: Near-steady close; fades after strong start

Corn futures at the Chicago Board of Trade on Friday closed steady to slightly higher but near the session lows, as bulls could not hold strong early gains that came amid bullish weather developments in the U.S. corn belt.

May corn futures closed up 1 cent at US$5.77 1/4. July corn finished up 1 1/4 cents at US$5.90 3/4 and new-crop December corn closed up 4 3/4 cents at US$6.06 3/4.

Weather in the corn belt was the main bullish fundamental propping up corn futures in early trading Friday that saw a strong open and double-digit gains. Heavy rains occurred in the heart of the belt the past 24 hours. "Much colder temps are also forecast to move into the area over the weekend and continue the first half of next week, slowing drying in fields and keeping planting of corn slow," said long-time grain market analyst Vic Lespinasse on his Web site www.grainanalyst.com.

Said Pro Farmer senior market analyst Brian Grete: "After trading (under pressure on) U.S. dollar strength earlier this week, corn futures responded Friday to weather. "Heavy rains caused flooding overnight in parts of the Corn Belt, which will further push back already-delayed corn plantings. With soils extremely saturated, it may well be the first full week of May before many farmers in the wettest areas can even think about getting back into fields," said Grete. It's generally acknowledged that in the heart of the U.S. corn belt, corn should be planted before May 10 to realize maximum yield potential.

During the early surge higher in corn futures prices, player sheets showed funds buying around 4,000 contracts.

However, lower soybean and wheat futures prices that traded near their session lows late also spilled over to pressure corn futures prices down the stretch. It did not help the corn market when news reports late in the day said the governor of Texas has requested to opt out of the U.S. renewable fuels mandate that requires usage of renewable fuels. Corn-based ethanol is a popular renewable fuel. However, one analyst said this news is "no big deal, in my opinion."

Focus in the corn market on Monday morning will be squarely on the latest weather conditions and forecasts for the corn belt, the analysts agreed.

Technically, July corn on Friday closed just above the weekly low close and the bulls have faded a bit this week, said a market technician. Technical support for July corn is located at Friday's low of US$5.89 and then at this week's low of US$5.83. Resistance is located at US$5.96 3/4 and then at US$6.00.