May 20, 2008

 

CBOT Corn Review on Monday: Drops slightly on weather; light trading

 

 

Chicago Board of Trade corn futures ended lower on Monday on dry weather forecasts amid light trading, traders said.

 

July corn fell 4 1/4 cents to US$5.86 3/4 per bushel, September corn dropped 4 1/4 cents to US$5.99 1/4, and December corn slid 3 3/4 cents to US$6.13.

 

The market was weather-driven, traders said, as forecasts continue to call for dry weather in the U.S. corn belt that should allow growers the opportunity to plant. Traders were also awaiting Monday afternoon's crop progress report from the U.S. Department of Agriculture, and offered estimates of between 73% and 80% completed plantings. That would be below the five-year average but higher than last week's total of 51% planted.

 

Corn had rallied briefly during midday trading on what one trader said was spillover support from wheat, but corn couldn't break early technical resistance, a trader said. Trading remained light throughout, a trader added.

 

"There was no (follow-through) buying in this rally," he said of the short-lived midday upswing.

 

The market still has strong fundamental support heading into the growing season, said Joel Karlin, a market analyst with Western Milling. Farmers have enjoyed better planting weather lately, but the crop is still late and unseasonably cool weather is not good for growth, Karlin said.

 

Analysts say crop emergence will start to play a bigger role in the market and that the behind-average pace could be bullish. Last week just 11% of the crop was emerged, compared to the average of 33%. Karlin noted that even as recent dry weather allowed for more planting, it remained cold, hindering emergence. Much of the crop will pollinate in late July, when summer heat could be damaging. Heat during pollination can hinder corn yields.

 

July corn closed below its 50-day moving average for the second straight day after not doing so since March 24. But several people said they expect the market to continue trading on the same sideways path it has followed, between US$5.80 and US$6.20 for July corn.

 

The contract traded as low as US$5.83 1/2 in early trading and as high as US$5.93 1/2 during its mid-day rally.

 

CBOT oats futures were lower Monday. July oats were down 3 cents to US$3.91 per bushel, September oats were down 3 cents to US$4.02 and December oats were down 2 1/2 cents to US$4.17.

 

Ethanol futures were mixed. June ethanol was down US$0.018 to US$2.458 per gallon and July ethanol was up US$0.007 to US$2.467.