CBOT Corn Review on Tuesday: Up on end-user buying, heat forecast

 

 

Chicago Board of Trade corn futures closed higher Tuesday on end-user buying and concern about potential heat and humidity hitting the U.S. Midwest over the weekend, traders and analysts said.

 

September corn closed up 12 cents to US$5.94 per bushel, December corn closed up 12 1/4 cents to US$6.13 1/2 and March closed up 12 3/4 cents to US$6.33 1/2.

 

End-users are looking to capitalize on a US$2 break in prices, which is reflected by increased export demand, traders and analysts said. Prices have fallen throughout July on favorable crop weather.

 

"We're seeing some commercial pricing," a trader said.

 

He noted the sale of 152,400 metric tonnes of corn to Japan as a sign of increased end-user buying.

 

"The market is doing its job; it's buying demand," said Arlan Suderman, an analyst for Farm Futures.

 

Both ethanol producers and livestock users are also "starting to see some opportunities," said Suderman.

 

Corn also saw support from potential high temperatures hitting the U.S. Midwest over the weekend, traders and analysts said. The market has put in a "weather premium thinking there could be a yield reduction," a trader said.

 

Losses early in the day were reversed in part because the market did not take into account "adverse weather," said John Reilly, an analyst at Citigroup.

 

Corn traded lower throughout much of early trading on a break in crude oil prices.

 

Although higher temperatures and humidity are expected over the weekend across the U.S. Midwest, it will not likely prevail in the long-term, said Drew Lerner, an agricultural meteorologist at World Weather Inc.

 

"We shouldn't have more than just a few days of stressful conditions in the eastern part of the corn belt," he said.

 

The market has been sensitive to past weather forecasts projecting excessive heat this summer, although the heat failed to materialize in each case, analysts said.

 

Some analysts see today's gains as recognition that corn still faces many hurdles, including risks emanating from a late-growing season and the potential for an early frost.

 

"End-users want to get some coverage in there in case it becomes a problem further down the road," said Suderman. "They realize from the June rally what it could end up being if there is a bullish surprise out there."

 

CBOT oats futures ended lower. September oats ended down 3 cents to US$3.86 per bushel, December oats ended down 2 3/4 cents to US$4.04 1/4 and March oats ended down 3 1/4 cents to US$4.22 3/4.

 

Ethanol futures ended mixed. September ethanol ended up US$0.003 to US$2.459 per gallon and December ethanol ended down US$0.024 to US$2.435.