May 1, 2008

 

CBOT Corn Review on Wednesday: Corn continues higher on rainy forecasts

 

 

Concerns about continued rainfall into next week pushed Chicago Board of Trade corn futures higher Wednesday.

 

May corn closed up 9 cents to US$6.00 1/4 per bushel, July closed up 7 3/4 cents to US$6.12 1/4 and December closed up 6 1/4 cents to US$6.22. Funds purchased 6,000 contracts.

 

Weather remains key to the market as farmers look for opportunities to plant their crop by mid-May, when yields are likely to start dropping, analysts said.

 

Prices had dropped Tuesday amid some fund liquidation and uncertainty over next week's weather forecasts. But with the liquidation over, corn held firm overnight and rose Wednesday as meteorologists called for more rain next week. "After a couple years of almost ideal planting weather, it's looking like it's going to be a struggle this year," said Shawn McCambridge, a senior grains analyst with Prudential-Bache.

 

A floor trader noted that despite farmers' increasingly advanced planting technology, "you still have to have a window to get it in."

 

Mike Tannura, meteorolgist and commodity analyst with T-storm Weather, said that in addition to the rain that will start moving through the Midwest overnight, more rain is expected next week.

 

Although he said there was a "small chance" of dry weather next week, almost all weather models are calling for rain. It could move through the Corn Belt as early as Monday or as late as Thursday, he said.

 

The western Corn Belt will likely see more opportunities for planting than areas farther east, he said.

 

Analysts said planting delays are making it increasingly unlikely that this year's harvest will exceed the U.S. Agriculture Department's projection of 86 million acres, as many had hoped.

 

Falling crude oil prices and expectations that the Federal Reserve would strengthen the dollar by signaling an end to further interest rate cuts were putting modest downward pressure on corn prices, traders and analysts said.

 

CBOT oat futures rose of fund buying, a floor trader said. July oats ended up 9 1/4 cents at US$3.88 per bushel.

 

Ethanol futures closed higher. June ethanol rose US$0.009 to US$2.44 per gallon.