June 16, 2008

 

CBOT Corn Outlook on Monday: Sharply higher on flood damage

 

 

Chicago Board of Trade corn futures are expected to open sharply higher Monday as flooding continues to damage the U.S. crop and threaten more acres, traders said.

 

In overnight trading, July corn was up 18 3/4 cents to US$7.50 1/2 per bushel, September corn was up 18 3/4 to US$7.64 1/2 and December was up 18 3/4 to US$7.83 3/4.

 

After hitting new all-time highs every day last week, July corn peaked at US$7.57 3/4 overnight, an all-time high. Prices are expected to open 17-19 cents higher Monday.

 

Historic flooding across the corn belt, particularly in Iowa, the top corn-producing state, is causing widespread crop damage, analysts said.

 

"Many producers aren't worried about corn being knee-high on the Fourth of July, they're worried about being knee-deep," said John Kleist, a broker/analyst with Allendale in McHenry, Ill.

 

A trader said that although weather could be drier this week, "there's damage all over the place. We've got to see how bad it is." He added that concern is shifting to flooding of the Mississippi River.

 

Higher crude oil and a weaker dollar should also support a corn futures rally, a trader said.

 

Some analysts say it's too soon to estimate total crop losses, but the damage will be "significant." Farm Futures on Monday morning estimated 3.3 million acres of corn could be lost, based on the results of an online poll.

 

The DTN Meteorlogix forecast calls for showers and thunderstorms Monday in the eastern corn belt, totaling 0.25 to 1.0 inches. Scattered showers and thunderstorms will develop in the western corn belt on Tuesday and move into the east on Wednesday.

 

An analyst said the flood of money coming into the corn market was evident in the Commodity Futures Trading Commission's commitments of traders report released Friday. Speculative funds added 34,732 contracts to their long positions and cut 4,588 contracts from their short positions, putting them net long 219,041 contracts, the CFTC reported.

 

Index funds added 13,258 contracts to their long positions and added 2,147 contracts to their short positions, and are now net long 427,352 contracts, the CFTC said.