June 18, 2000

 

CBOT Corn Review on Tuesday: More gains on flooding, crop damage

 

 

Chicago Board of Trade corn futures continued to climb Tuesday, closing higher on continuing concerns about flood damage to the crop.

 

July corn closed up 9 3/4 cents to US$7.42 1/4 a bushel, September corn closed up 9 3/4 cents to US$7.56 1/2, and December corn settled up 11 cents to US$7.76.

 

Although corn didn't set a new all-time high for the first time since June 4, the market shook off early ideas that Monday's crop progress report from the U.S. Department of Agriculture was bearish. Some traders had expected steeper declines in crop ratings due to historic flooding in Iowa and elsewhere.

 

The USDA report showed 57% of the crop was rated good to excellent, down 3% from last week.

 

"This is the lowest rated corn crop since 1996, the lowest rated soybean crop since 1993," said Brian Hoops, president of Midwest Market Solutions. "That doesn't sound bearish."

 

The full extent of the flood damage isn't yet clear, many analysts say. But a preliminary estimate generated by researchers at Ball State University and the University of Tennessee puts total agricultural damage in Iowa, the top corn producer and hardest-hit state, at roughly US$2.7 billion.

 

Gains were limited by forecasts calling for dry weather throughout this week. T-storm Weather said below-normal temperatures will limit soil drying in many areas, however, and chances of rain will increase "substantially" next week.

 

The market is awaiting a June 30 acreage report from the U.S. Department of Agriculture, which is expected to show a decline in planted acres. On Tuesday, a statistician for USDA's National Agricultural Statistics Service said that survey may have to be followed up with another in July because the report only reflects the situation in the first two weeks of June, before the full extent of the flood damage was clear.

 

Corn and soybeans have been most affected by the flooding, and have posted significant gains while divorcing themselves from crude oil activity. Analysts say the corn crop is in more dire shape than soybeans because corn must be planted earlier.

 

"There's just no way to plant corn now and get any kind of a decent yield," Hoops said. "With soybeans, there's still a small window of opportunity."

 

In international news, corn is becoming just as attractive as soy to farmers in the Brazilian state of Parana, said Anderson Galvao Gomes, an agribusiness consultant at Celeres.

 

CBOT oats ended higher on spillover from corn and soybeans, a trader said. He said that "4.50 oats are really expensive, but not compared to US$8 corn, I guess." July oats were up 3 cents to US$4.24 per bushel, September oats were up 3 1/2 cents to US$4.36 1/2 and December oats were up 3 3/4 cents to US$4.52 3/4.

 

Ethanol futures were higher. July ethanol was up US$0.031 to US$2.890 per gallon and December ethanol was up US$0.011 to US$2.870.