May 22, 2008

 

CBOT Corn Review on Wednesday: Rallies on crude strength

 

 

Chicago Board of Trade corn futures ended sharply higher Wednesday thanks to a rally in crude oil, traders said.

 

July corn was up 17 1/2 cents to US$6.07 1/4 per bushel, September corn was up 17 1/2 cents to US$6.19 3/4 and December corn was up 17 1/2 cents to US$6.33 1/2.

 

Traders said crude oil prices, which climbed more than US$4 Wednesday to close above US$133 per barrel for the first time, dwarfed other factors in the corn market. The rally pushed July corn past technical resistance, to a close above its 50-day moving average for the first time since Thursday.

 

A weak dollar and higher gold prices were also supportive, traders said.

 

Although growers have made good progress in their planting the past couple of weeks, analysts said the season is still off to a slow start. Much of the crop has been planted in cold, wet conditions that could affect yields later on, they said.

 

"If it's planted into soil that's too wet, the roots won't be deep enough to withstand dry spells," said Frank Cholly, a senior market analyst with Lind-Waldock. "This crop will be stressed by any kind of drought at all."

 

He said he remains bullish on corn because recent losses were largely due to expectations that plantings were caught up and the crop would be strong. December corn could increase another 50 cents, he said.

 

But an analyst said the upcoming long Memorial Day weekend should limit traders from taking too many long positions the rest of this week.

 

A trader says there is some downward pressure from concerns that the U.S. Commodity Futures Trading Commission is considering moves that would limit the presence of index funds in the futures markets. Critics have argued that speculation is distorting futures prices, sending them higher.

 

CBOT oats futures were higher amid light trading, a trader said. He said funds were selling July and buying December oats. July oats were up 2 1/2 cents to US$3.96 1/2, September oats were up 2 1/2 cents to US$4.07 1/2 and December oats were up 2 1/2 cents to US$4.22 1/2.

 

Ethanol futures were higher. June ethanol was up US$0.052 to US$2.533 and July was up US$0.054 to US$2.515.