June 5, 2008

 

CBOT Corn Review on Wednesday: Climbs on heavy rains, crop concerns

 

 

Soggy weather in the U.S. corn belt pushed Chicago Board of Trade corn futures higher Wednesday, although gains were limited by outside markets, traders said.

 

July corn was up 6 1/2 cents to US$6.14 1/2, September corn was up 6 1/2 cents to 6.27 3/4, and December corn was up 6 3/4 cents to US$6.43.

 

Heavy rains have caused flooding and will require farmers to replant throughout the southern corn belt and in central Illinois, analysts say. A trader says report indicates there are still 4 million acres of corn to plant. Analysts say yields for corn planted after mid-May typically drop, as the crop is more likely to deal with extreme summer heat just as it is pollinating.

 

Warm weather forecasts will help crop development in some areas, but a trader says overall, weather is supportive because of the rain. Reduced acreage and yields are becoming increasingly likely, analysts said.

 

"They're just going to have to get in and plant as much as they can," a trader said.

 

DTN Meteorlogix said rainfall from eastern Iowa to Ohio totaled a reported 1.5 to 6 inches Tuesday. Its forecast calls for more rain and thunderstorms Thursday and Friday, particularly in the west and north areas of the corn belt.

 

Wednesday's volume was light and trading choppy, traders said. Lower crude oil and a stronger dollar pressured corn, limiting gains and keeping corn well within it recent trading range between US$5.80 and US$6.20 for July.

 

An analyst said the market will remain stuck in the trading range until fresh fundamental news emerges, such as confirmed acreage and yield reductions for the crop.

 

Jerry Gidel, a grains analyst with North American Risk Management Services, said there was a possible "hangover" from Tuesday's Commodity Futures Trading Commission announcement of policy changes, limiting gains.

 

The CFTC said it will develop a proposal to require more detailed information from index traders and swaps dealers and "whether classification of these types of traders can be improved." The commission will also withdraw proposed rules that would have increased speculative position limits on certain contracts.

 

Gidel and other analysts say the changes will ultimately have little effect.

 

Another trader said funds were buying late, which he said could be a sign they were encouraged that the CFTC changes were not more drastic.

 

CBOT oats ended higher on the day. July oats were up 8 cents to US$3.86 per bushel, September oats were up 9 cents to US$3.98 and December oats were up 7 1/2 cents to US$4.13.

 

Ethanol futures were lower. July ethanol was down US$0.066 to US$2.255 per gallon.