June 14, 2008

 

CBOT Corn Review on Friday: Climbs to new highs again on flooding

 

 

Widespread flooding and continued rain for parts of the U.S. corn belt propelled Chicago Board of Trade corn to an all-time high Friday.

 

July corn was up 22 3/4 cents to US$7.31 3/4 per bushel, September corn was up 23 cents to US$7.45 3/4 and December corn was up 25 1/2 cents to US$7.65. July peaked at US$7.37 1/2 in electronic trading, an all-time high.

 

Tight supply forecasts for the 2008-09 crop and historic flooding has put the market into a demand-rationing mode, analysts said. Traders are looking for signs that the price increase is reducing demand.

 

"Surely it has rationed demand, but the question facing the market every day is, 'Has it rationed enough?'" said Bill Nelson, a grain analyst with Wachovia Securities. "As of now, I don't think the answer is yes."

 

Corn set all-time highs each day this week as the extent of corn belt flooding emerged. Iowa, the top corn-producing state, has been hit particularly hard. But areas of southern Illinois and Indiana have also experienced "immense" flooding damage to acres and yield, said Mike Zuzolo, senior analyst for Risk Management Commodities.

 

"If you are a livestock feeder who hasn't covered their needs yet, please don't think that prices can't go higher, because again, assessment of the damage cannot even be computed or made yet," Zuzolo wrote in an e-mail.

 

Southern Illinois and Indiana will experience more thunderstorms Friday afternoon. The storms will not be as intense as rains in Iowa and Wisconsin during the past 24 hours, where rains exceeded 5 inches in some areas, but an inch could fall in many areas, said Mike Tannura, meteorologist with T-storm Weather.

 

Analysts note corn prices rose all week regardless of crude oil prices and the dollar index. Corn rose 12.4% from the close a week ago.

 

"Corn has been a stalwart here, just really holding its ground," Nelson said.

 

Friday's rally defied analysts' expectations that profit-taking before the weekend and weak outside markets would limit corn's gains.

 

CBOT oats were higher. July oats were up 4 1/2 cents to US$4.25, September oats were up 4 cents to US$4.37 and December oats were up 5 1/4 cents to US$4.53.

 

Ethanol futures closed higher. July ethanol was up US$0.120 to US$2.811 per gallon and December ethanol was up US$0.121 to US$2.831.