June 7, 2008

 

CBOT Corn Review on Friday: Higher on crop concerns; gains trimmed

 

 

Fears of diminished crop production, along with record-high crude oil prices, sent Chicago Board of Trade corn futures higher Friday, analysts said.

 

July corn was up 7 1/2 cents to US$6.50 3/4 per bushel, September corn was up 7 3/4 to US$6.63 3/4 and December corn was up 7 cents to US$6.77 3/4. Prices closed several cents off the record highs set earlier in the day.

 

A rally in crude oil, which reached new record highs in Friday trading, helped fuel the rally, analysts said. They said funds were heavy buyers at the end of the week, as they moved out of equities and back into commodities because of inflationary fears.

 

Prices did not follow crude late in the day, however, when oil spiked and corn trimmed a couple of cents from its gains.

 

A trader said short-term technical weakness prevented corn from following crude. Profit-taking ahead of the weekend also limited gains, analysts said.

 

"I really expected to see some caution ahead of the weekend, particularly when you're trading a weather market," said Arlan Suderman, analyst for Farm Futures.

 

July hit an all-time high earlier in the day at US$6.63 1/4. September and November hit contract highs.

 

Friday's rally was supported by heavy rainfall that has fallen across the U.S. Midwest recently and forecasts for more storms in the north and west corn belt into next week. Following an already late crop, the weather has caused concern that production will suffer due to replanting, reduced planted acreage and lower yields.

 

Terry Reilly, an analyst with Citigroup, said he expected Monday's crop progress report from the U.S. Department of Agriculture to show there is still 1 million to 1.5 million acres of corn left to be planted. At this late date, not all of those acres will be used for corn.

 

"Some of that will make its way into beans, some will go unplanted," Reilly said.

 

CBOT oats were lower. July oats were down 4 3/4 cents to US$3.99 1/4, September oats were down 5 cents to US$4.10 3/4 and December oats were down 4 1/2 cents to US$4.26.

 

Ethanol futures ended higher. July ethanol was up US$0.099 to US$2.441 per gallon, and December ethanol was up US$0.115 to US$2.490.

 

In international news, world corn production was forecast at 762.1 million tonnes, down from 769.1 million tonnes in 2007-08, according to F.O. Licht's World Grain Markets Report.

 

F.O. Licht forecast U.S. corn output for 2008-09 at 307.3 million tonnes, down 24.8 million from last year's record high production.