May 20, 2009

 

CBOT Corn Review on Tuesday: Higher on crop worries, strength in soy

 

 

The surging soy market and continued nervousness over the slow planting pace in the eastern corn belt pushed Chicago Board of Trade corn futures higher Tuesday.

 

July corn ended up 4 1/4 cents to US$4.25 3/4 per bushel, September corn climbed 4 1/2 cents to US$4.35 1/4 and December corn settled up 5 cents to US$4.47.

 

Although the eastern U.S. corn belt is enjoying dry weather at least through Friday, the trade still feels the need to keep some risk premium in the market, some analysts said.

 

"Despite the fact that we've got a pretty wide-open forecast this week, everybody is finally understanding that we're not going to plant all of Illinois' corn today," said Jerry Gidel, analyst for North America Risk Management Services.

 

Monday's crop progress report, which highlighted the slow planting pace in Illinois and Indiana, and forecasts calling for potential rain on the weekend or early next week fed concerns about the crop, traders said. There are differing views as to how much planting farmers will be able to complete before rains return.

 

The crop is now potentially losing yield with each day it goes unplanted, agronomists said.

 

Analysts add that farmers are going to feel increasing pressure to get the crop planted, even in muddy conditions, which could have a negative effect on output.

 

A key driver of the gains was the soy complex, which continued its surge on strong fundamentals. Old-crop soybeans gained 15 to 20 cents. Gidel said that corn's relatively modest gains compared to soybeans show that the crop's troubles don't have traders wildly excited.

 

"It's just kind of a low murmur at this point since we still have a substantial amount of old crop in our pocket," Gidel said.

 

Funds bought an estimated 6,000 contracts Tuesday.

 

Although July corn has now gained 8 1/2 cents on the week, traders and analysts note that it has not tested last week's high of US$4.32. A floor trader added that December corn appears to have strong resistance at US$4.50.

 

CBOT oats futures ended lower. July oats ended down 1 3/4 cents to US$2.34 per bushel and December oats settled down 1 1/2 cents to US$2.55.

 

Ethanol futures were higher. June ethanol ended up US$0.016 to US$1.711 per gallon and July ethanol settled up US$0.005 to US$1.715.