May 14, 2008

 

CBOT Corn Review on Tuesday: Drops on clearing weather, rallies late

 

 

Chicago Board of Trade corn futures ended lower Tuesday as improved U.S. weather forecasts left the market without bullish news, traders and analysts said.

 

May corn finished down 6 cents at US$5.97 1/2 a bushel, July ended down 7 1/2 cents at US$6.07 1/4, and December closed down 6 3/4 cents at US$6.31. Funds sold 7,000 contracts.

 

Traders and analysts said the improved weather would allow farmers to get into the fields and aggressively plant their crop, enticing traders to take risk premium out of the market.

 

Despite the drop, corn did rally late to finish 12-14 cents higher than session lows, bouncing back after dipping below its 20-day moving averages. An analyst attributed the late rally to supportive rallies in crude oil and soybeans.

 

Tuesday's 10-day weather forecast from DTN Meteorlogix calls for drier weather and improved planting conditions in the U.S. corn belt.

 

One analyst said that given completed plantings rose last week from 27% to 51% by Sunday, according to the U.S. Department of Agriculture, drier weather would allow growers to make more significant headway.

 

"If they did 24% more last week, they'll do 30% this week," he said. "They're going to catch up."

 

Soggy weather has been a bullish influence on corn for weeks, analysts said. Traders and analysts said that after trading mostly higher on weather for weeks, the market was in a wait-and-see mode, and some traders holding long positions were getting antsy.

 

"What's the next input to take it higher?" a trader asked.

 

Analysts also said strength in the dollar helped push prices lower.

 

Meanwhile, T-storm Weather calls for rain Thursday as far north as central Illinois and Indiana, although areas further south will still see the most rain. Rainfall totals will be between 0.25-0.75 inches, enough to disrupt planting, according to the forecast.

 

CBOT oats were up slightly amid some commercial buying and overall light trading, a trader said. He added that there was little hedging by farmers right now because many of them are busy in the fields. July oats were up 1 cent to US$4.11 a bushel and September oats were up 1 3/4 cents at US$4.22. December oats were up 1/2 cent at US$4.31 1/2.

 

Ethanol futures were lower. June ethanol ended down US$0.037 at US$2.54 a gallon, and July ethanol ended down US$0.030 at US$2.510.