June 19, 2000

 

CBOT Corn Review on Wednesday: Flooding, supply fears support gains

 

 

U.S. corn futures closed higher Wednesday on Midwest flooding and supply concerns, but gains were limited by drier weather that could provide relief to some growers.

 

July corn closed up 4 cents to US$7.46 1/4 per bushel, September corn was up 3 3/4 cents to US$7.60 1/2 and December corn was up 4 cents to US$7.80 at the Chicago Board of Trade.

 

At this late date, most farmers will have to switch to soybeans, if they replant at all, analysts said.

 

"For the most part, all the corn we're going to get is already in the ground," said Frank Cholly Jr., senior market analyst with Lind-Waldock.

 

Although gains Wednesday and this week have been modest compared to last week's record-setting rally, fundamentals remain strong, and market participants say the bull market is intact.

 

"This is more of a pause than anything," said Cholly, who expects September and December to hit US$8. "It's just gone up so far so quick."

 

Drier weather this week could help some farmers start replanting, analysts said.

 

While a correction is likely, it could be mild unless weather improves substantially, they said. If the price drops very far, "traders will see that as a great opportunity to buy," one analyst said.

 

News that corn crops in Brazil and Paraguay will be smaller than expected due to crop-destroying frosts prompted "chatter" among traders that also supported prices, a trader said. Agronomists said Wednesday the frosts would likely reduce production.

 

Traders took a cautious approach as they awaited news of Mississippi River flooding that was expected to cause further damage in Iowa, Illinois and Missouri. The trade is also looking ahead to the June 30 report from the U.S. Department of Agriculture on planted acreage.

 

A Iowa Farm Bureau Federation official said that farmers can plant corn as late as June 25 or 26, but using a shorter season variety that would reduce yields by 30% to 40%. Dave Miller, a grain farmer and the bureau's director of research and commodity services, said some areas could take three or four weeks to dry out, however.

 

CBOT oats were higher. December oats closed up 3 cents to US$4.27 per bushel, September oats were up 2 cents to US$4.38 1/2 and December oats were up 2 1/4 cents to US$4.55.

 

Ethanol futures were higher. July ethanol was up US$0.051 to US$2.937 per gallon and December ethanol was up US$0.075 to US$2.945.