June 29, 2010
CBOT corn futures decline on fine weather
CBOT corn futures fell for the sixth day in a row Monday (June 28), ending at nearly a nine-month low as favourable weather forecasts spurred speculation of a record crop.
Corn futures for July delivery ended down 6.75 cents, or 2%, to US$3.3375 per bushel on the CBOT, the lowest price since October 2. Corn for December delivery, which represents the crop to be harvested in autumn, closed down 7.75 cents, or 2.1%, to US$3.5275.
Favourable weather has fuelled talk of a corn harvest that beats last year's record.
Forecasts calling for dry weather this week across the US corn belt emerged as a key factor, analysts said. Dry weather bodes well for crops following a spate of torrential rains in many areas of the Midwest.
In addition to the lack of rain, moderate temperatures are expected. This would assuage any concerns about pollination, a crucial period during corn's reproductive cycle that typically kicks into gear in July. High temperatures during pollination can decrease a crop's yield.
After a fast start to the growing season, more traders are now talking about yields exceeding last year's record of 164.7 bushels per acre. The USDA recently projected a national yield of 163.5 bushels per acre.
"The perception in Chicago is that all is well, and that a 170-bushel crop is in the bin," said Chad Henderson, an analyst with Prime Agricultural Consultants in Brookefield, Wisconsin.
Traders added that there is a reluctance to take long positions, which are profitable when prices increase, ahead of a US government report Wednesday (June 30) that is expected to show a boost in acres planted with corn. The USDA will release the acreage report, along with a quarterly report on stockpiles, at 8:30 a.m. EDT.
On average, analysts expect corn plantings to come in at 89.302 million acres, up from a March 31 projection of 88.978 million and up from the 2009 total of 86.5 million. Analysts said the acreage estimate typically increases from March to June, and that the strong start to this season likely prompted farmers to plant more corn.
CME Group said it will raise the storage rate for the CBOT wheat futures contract as it attempts to remedy the price difference between futures and physical wheat that persists even upon expiry of the futures contract. The maximum premium charge a wheat warehouse may charge holders of outstanding shipping certificates will jump to 26.5/100s of one cent from 16.5/100s of one cent per bushel. The change takes effect July 18.
