May 28, 2008

 

CBOT Corn Review on Tuesday: Drops on crude; weather supportive

 

 

Chicago Board of Trade corn futures ended lower Tuesday on weak outside markets but showed few signs of breaking out of a sideways trading trend, analysts said.

 

July corn was down 1 3/4 cents to US$5.98, September corn was down 1 3/4 cents to US$6.11, and December corn was down 1 3/4 cents to US$6.25 1/2.

 

A stronger dollar and weaker crude oil prices kept prices lower, analysts said. But a trader said it was "a respectable performance" considering crude oil dropped more than US$3 on the day.

 

Losses were limited by recent stormy weather across much of the U.S. corn belt and a forecast calling for cold weather, which could hinder emergence, traders said.

 

Weather will remain "less than ideal" for planting and emergence in most parts of the U.S. corn belt over the next 10 days because of cool, wet weather, according to T-storm Weather. Weather will be "much cooler than average" the next couple days in most of Iowa, Illinois and Indiana, the weather service said.

 

The U.S. Department of Agriculture's crop progress report this afternoon is expected to show plantings between 80% and 90% complete, traders and analysts said.

 

The cooler weather, following behind-average planting, could cause yield reductions this summer, said Western Milling grains analyst Joel Karlin. He said he is also hearing reports of some farmers in Iowa, Illinois and Indiana having to replant because of recent rains.

 

"The last 10%, 15% of this crop is going to be tough to get in there," Karlin said.

 

The market remains stuck in a trading range between US$5.80 and US$6.20 for July corn and will likely remain there until some significant news emerges, analysts said.

 

Traders said the market continues to follow crude oil. The recent rally in crude oil prices have made margins for ethanol producers the best they've been in 15 months, Karlin said, which supports corn demand.

 

In international news, Argentina exported 1,997,844 metric tonnes of corn in April, down slightly from the 2,036,657 tonnes shipped in April 2007, according to the latest data from the animal and food-inspection agency Senasa.

 

CBOT oats were higher. July oats were up 8 1/2 cents to US$3.94 per bushel, September oats were up 8 1/2 cents to US$4.05 and December oats were up 8 1/2 cents to US$4.22. A trader said buying increased late in the day.

 

Ethanol futures were lower. June ethanol was down US$0.016 to US$2.485 and July ethanol was down US$0.024 to US$2.465 per gallon.