May 2, 2008

 

CBOT Corn Review on Thursday: Corn up on continued planting concerns

 

 

Chicago Board of Trade corn futures brushed aside weakness in outside markets and a stronger dollar on Thursday, rallying late to finish with gains as farmers face continued uncertainty about when they will be able to plant.

 

May corn closed up 5 1/4 cents to US$6.05 1/2 per bushel, July closed up 5 cents to US$6.17 1/4 and December closed up 3 1/4 cents to US$6.31 1/2.

 

On a day in which most other commodities fell, corn showed its fundamental strength, said Frank Cholly, a senior market analyst for Lind-Waldock.

 

"I think this is not the beginning, but it's not the end, of a bull market," Cholly said.

 

Technically, corn is "starting to form a nice upward channel," he said, and he expects corn will continue rising, eventually to as high as US$6.75 or US$6.80 for December corn. December corn is hovering near its all-time high of US$6.37 1/2, which it reached on Tuesday. Traders said a stronger dollar, falling crude oil and a sense that a farmers' strike in Argentina was less likely put downward pressure on corn, keeping prices in negative territory for most of the day.

 

Commodity funds sold 5,000 contracts, and Kent Beadle, a market analyst for Country Hedging, said there appears to be a concerted move by the investment community to move from commodities to stocks.

 

"If in fact that is happening, it will likely take a while to stop that trend," Beadle said.

 

Traders continue to key in on weather forecasts, and whether the skies will clear long enough for growers to plant their corn by mid-May, when yields typically start to decline.

 

Forecasts call for rain throughout the Midwest between now and Saturday. Drew Lerner, meteorologist with World Wide Weather Inc., said the good news for corn growers is that in southern parts of the Midwest, including Indiana, Ohio and Kentucky, the coming rain will "not last long enough to affect fieldwork in a significant way."

 

The corn belt will see more rain next week, he said. But weather models are "ridiculously volatile" right now, making it tough to forecast beyond that, he said.

 

CBOT oat futures closed sharply higher on "tremendous" fund buying, a floor trader said. Fund buying accelerated after the July contract rose above its 50-day moving average around US$3.96, he said. Commercials were sellers on the way up, another trader said. July oats ended up 19 1/2 cents at US$4.07 1/2 per bushel after climbing the daily limit of 20 cents.

 

Ethanol futures closed lower. June ethanol fell US$0.002 to US$2.438 per gallon, and July ethanol shed US$0.014 to US$2.41.