May 29, 2009

 

CBOT Corn Review on Thursday: Higher on crude, crop concerns

 

 

Higher crude oil prices and concerns about a crop that is far behind schedule helped push Chicago Board of Trade corn futures higher Thursday, analysts said.

 

July corn ended up 2 3/4 cents to US$4.28 3/4 per bushel and December corn was up 2 1/2 cents to US$4.52 1/4.

 

The market set its highs in early trading and retreated by mid-day, trading slightly lower amid profit-taking and a dip in wheat prices, traders said. But prices rebounded late. The status of the late-planted crop remains a focus of the market, analysts said.

 

"The crop has a long way to go and I think there's an unwillingness to sell aggressively," said Jason Britt, president of Central State Commodities.

 

Traders and analysts said that although there is a planting window for the next few days, midday weather forecast updates were wetter for next week. This helped nudge the market higher, Britt said.

 

But the wettest areas of Illinois and Indiana actually appeared drier in the forecasts, said Mike Zuzolo, senior analyst with Risk Management Commodities.

 

Some analysts have said that as long as the crop gets planted by the end of June it should be fine, and they point to last year, when a wet spring and flooding caused replanting but the crop still attained trend-line yields. But Britt said last year was "an outlier," and the reality is that ending stocks will be lower next year, which would support the market.

 

At the same time, he said "this is not a rocket shot up" and added that farmers still have a significant amount of grain to sell.

 

Higher crude oil prices supported the market, analysts said. Corn is tied to crude oil because of corn's connection to the energy market through ethanol.

 

The December contract set a new recent high at US$4.57 1/2 and also set a new high for the close. The July contract failed to surpass resistance at US$4.35, however, and a trader said the market entered a vacuum after that at mid-day as buyers disappeared.

 

CBOT oats futures ended lower. July oats ended down 3 3/4 cents to US$2.50 per bushel and December oats settled down 3 3/4 cents to US$2.69 3/4.

 

Ethanol futures were higher. June ethanol ended up US$0.011 to US$1.714 per gallon and July ethanol ended up US$0.011 to US$1.725.