April 30, 2009

 

CBOT Corn Review on Wednesday: Surges on wet weather, outside markets

 

 

Chicago Board of Trade corn futures ended sharply higher, surging on growing planting concerns because of the wet weather and outside markets, analysts said.

 

May corn ended up 18 cents to US$3.93 per bushel, July corn settled up 17 3/4 cents to US$4.01 1/4, and Dec corn ended up 17 1/2 cents to US$4.21 3/4.

 

Wet weather over the weekend, along with continued rain this week and more expected next week, is fueling the market, analysts said.

 

"It's going to be the middle of May before a lot of tractors get rolling in Illinois and Indiana," said Paul Beere, analyst for Prime Ag Consultants. "That's probably the biggest part of (the rally) right now."

 

Higher equities and crude oil, and a weaker dollar were also supportive. A surge in soybeans on another reduction in the estimated size of the crop in Argentina also boosted corn.

 

There is increasing concern that the corn planting delays might prompt farmers to switch to soybeans, analysts said. Beere said farmers in the southern corn belt in particular, in places such as southern Missouri, are considering the switch.

 

Late planting of the corn increases the chances that the crop runs into intense summer heat just as it is entering its crucial pollination phase, and also increases the concern about damage from an early frost, analysts said.

 

The market's ability to "hold up against such immense pressure" at the beginning of the week indicated there were a lack of sellers, said Mike Zuzolo, senior analyst for Risk Management Commodities.

 

Funds bought an estimated 12,000 contracts Wednesday.

 

Corn was also compelled to follow soybeans, which rose sharply thanks in part to another reduction in the estimated size of Argentina's crop.

 

Traders and analysts mostly expect weak deliveries against the May contract on first notice day, which is Thursday. Estimates vary widely, but are mostly between 100 and 800. There were 2,023 contracts registered for delivery as of Tuesday.

 

Concerns about the swine flu's effect on demand have eased, but remain in the background, traders said. A South Korean tender for 220,000 metric tonnes of corn was seen as a sign of healthy demand.

 

CBOT oats futures ended higher. May oats were up 6 3/4 cents to US$1.93 per bushel and July oats were up 6 1/2 cents to US$2.02.

 

Ethanol futures were higher. May ethanol was up US$0.053 to US$1.612 per gallon and June ethanol was up US$0.044 to US$1.600.