June 11, 2008

 

CBOT Corn Review on Tuesday: All-time high on tight supply projections

 

 

Government projections of reduced yields and ending corn stocks for the 2008-09 year pushed Chicago Board of Trade corn futures to a new all-time high Tuesday.

 

July corn closed up 16 cents to US$6.73 1/4 per bushel, after peaking at US$6.74, an all-time high, in the final minutes of trading. Analysts said the tight supply projections for the 2008-09 crop required price rationing of nearby July to protect supplies.

 

September corn was up 16 1/4 cents to US$6.86 3/4 and December was up 17 1/2 cents to US$7.02 3/4.

 

Prices rallied despite lower crude oil and a stronger dollar, as corn remains a weather-driven market, analysts said. They noted that reduced 2008-09 ending stocks projections didn't even take into account a drop in planted acres, which seems likely due to heavy rains and flooding across parts of the Midwest.

 

"That seems like it is going to have to be addressed," said John Kleist, a broker/analyst with Allendale in McHenry, Ill.

 

A trader said that money appeared to be moving into grains from other commodities, and that "the one to buy is corn because of all the problems."

 

The USDA report increased projected ending corn stocks for the 2007-08 marketing year by 50 million bushels based on lower export sales. It lowered yield projections for the 2008-09 marketing year to 148.9 bushels per acre from 153.9 bushels per acre, and forecast ending stocks of 673 million bushels, which would be the lowest level since 1995-96.

 

Analysts say recent rains have flooded many fields from Iowa to Wisconsin to southern Indiana, and that for many farmers it will be too late to replant.

 

T-storm Weather forecasts the western corn belt will see more rain starting Wednesday, and the rain will move through the eastern corn belt by Friday. Meteorologist Mike Tannura said the weather could be drier next week but added that floodwaters across the Midwest may act like a giant lake that could fuel more thunderstorms.

 

September and December corn set new contract highs, and December broke US$7 for the first time. Friday marked the first time any corn contracts broke US$7, as March, May and July 2009 contracts all broke that barrier.

 

CBOT oats closed slightly lower. July oats were down 1 cent to US$3.93 per bushel, September oats were down 1/2 cent to US$4.05 and December oats were down 1 cent to US$4.20.

 

Ethanol futures ended higher. July ethanol was up US$0.037 to US$2.495 per gallon and December ethanol was up US$0.032 to US$2.540.