May 9, 2008

 

CBOT Corn Review on Thursday: New contract highs on weather concerns

 

 

Chicago Board of Trade corn futures rallied Thursday to record highs on weather concerns and in anticipation of Friday morning's U.S. Department of Agriculture supply and demand report, traders and analysts said.

 

May corn was up 17 1/4 cents to US$6.18 3/4, July corn was up 17 1/4 cents to US$6.30 1/4, and December corn closed up 15 3/4 cents to US$6.46 1/4 a bushel.

 

Wet weather so far this week across the U.S. corn belt, as well as forecasts for more rain this weekend and next week, drove prices to the record highs, traders said. May, July and December all closed slightly off all-time contract highs set earlier in the day.

 

Daniel Pavilonis, a senior market strategist with Lind-Waldock, said that in addition to the slow planting pace, some of what has been planted will have trouble because of the continued rain.

 

Traders said corn showed technical strength by remaining firm after breaking contract records.

 

A trader and an analyst said the market was also boosted by anticipation of Friday's supply and demand report, which will be released at 8:30 a.m. EDT. Some are bullish on the report and expect the USDA to lower yield estimates from 155 bushels per acre to as low as 151, the trader said.

 

The trader didn't share that bullishness, however, saying there was little precedent for the USDA to lower yield estimates in its May report.

 

In a Dow Jones survey, analysts project the report will peg U.S. corn stocks for the 2007-08 marketing year at 1.32 billion bushels. That would be up from the government's April estimate of 1.283 billion bushels. The analysts are projecting a steep drop in ending corn stocks for the 2008-09 marketing year, to 707 million bushels.

 

Pavilonis said some farmers are waiting to hedge in the futures market in anticipation of further gains.

 

CBOT oats futures closed slightly lower amid some hedging, a trader said. July was down 1 cent to US$4.14 1/2 and September was down 1 cent to US$4.25 1.2. The trader said oats recovered losses from earlier in the day, and relied on corn for strength. "The only thing going for oats is corn," he said.

 

Ethanol futures closed higher. June ethanol was up 3.6 cents at US$2.595 per gallon, and July ethanol rose 2.9 cents to US$2.559.