May 31, 2008

 

CBOT Corn Review on Friday: Rally on crop concerns, Month-end buying

 

 

Chicago Board of Trade corn futures ended higher Friday, as firm outside markets, concerns about crop conditions and end-of-month buying sparked a rally, traders said.

 

July corn closed up 17 cents at US$5.99 1/4 per bushel, September corn finished up 17 1/4 cents at US$6.12 1/2, and December corn gained 17 cents to US$6.26 1/2.

 

Technical momentum encouraged buyers, a trader said, as the market continued to rebound from Thursday's brief dip below a two-month trading range. Prices climbed several cents during the last 25 minutes of trading Friday.

 

The market turned its attention to Monday's U.S. Department of Agriculture crop progress report, which will disclose corn conditions for the first time, traders said. They expected the portion of the crop rated good-to-excellent would be well below the average of 70%.

 

"It's not going to be rated very good," a trader said, noting behind-average emergence. "How can you rate it when you can't see it?"

 

Heavy rainfall in the western U.S. corn belt, particularly Iowa, was raising concerns about continued emergence delays, and the likelihood that many farmers will have to replant, which at this late stage would likely result in lower yields. Much of the central part of the state received 2 to 4 inches of rain during the past 24 hours, said Mike Tannura, meteorologist with T-storm Weather.

 

Although the next couple days will be dry, soils won't have a chance to dry before rain returns to the western corn belt late Sunday or Monday, Tannura said.

 

Jerry Gidel, grains analyst with North American Risk Management, said if growers are forced to replant at this late date, they most likely would be forced to switch to soybeans.

 

Strong outside markets, including firm crude oil and higher soybeans, also supported corn, traders said.

 

"Crude is not that much higher, but it's not US$3 or US$4 lower, and that takes the pressure off of corn," an analyst said.

 

CBOT oats futures were slightly higher. September oats were up 1/2 cent at US$3.94 per bushel and December oats were up 1 cent at US$4.10. July oats were flat.

 

Ethanol futures were mixed. June ethanol was down US$0.015 at US$2.391 per gallon and July was up US$0.011 at US$2.398.