August 12, 2009

 

CBOT Corn Review on Tuesday: Slightly higher; pre-report consolidation

 

 

Chicago Board of Trade corn futures ended slightly higher Tuesday in consolidation ahead of Wednesday's key U.S. government reports.

 

September corn was up 2 1/4 cents at US$3.26 1/2 a bushel and December corn was up 1/2 cent at US$3.31.

 

The market was higher throughout most of the day and traded within a 5-cent range. But corn was unable to follow soys, which surged. One trader said there appeared to be selling of corn and buying of soys, the opposite of Monday's action.

 

The trade is awaiting Wednesday's USDA reports, which are expected to show increased crop production and ending stocks. The reports will be released at 8:30 a.m. EDT.

 

Rich Feltes, MG Global director of research, said in a market commentary that "we think it will be difficult to have a bearish bean report and even more difficult to have a bullish corn report."

 

Said one trader, "How can you not have a bearish report?"

 

Analysts on average expect the USDA to peg corn production at 12.472 billion bushels, up from 12.290 billion in July and above the 2008 total output of 12.101 billion. They projected the USDA would peg the corn yield at 157.1 bushels per acre, up from the USDA's July estimate of 153.4 bushels and the 2008 yield of 153.9 bushels.

 

The market is getting no support from the weather, which is generally considered favorable for the crop. Expectations of a huge crop could continue to weigh, said David Smoldt, vice president of operations for FCStonnee.

 

"Ultimately I think corn's going to go under US$ in the December contract," he said.

 

Funds sold an estimated 4,000 contracts Tuesday.

 

In other news, hailstorms that ripped across central Iowa Sunday have caused farmers at least tens of millions of dollars in crop damage and could cut into the state's corn and soy yield, officials said Tuesday.

 

The storms devastated corn and soys in a two- to four-mile area stretching across much of the state along U.S. Highway 20, said Jim Pattonne, Iowa State University regional extension education director.

 

Pattonne said the crop damage could be in the "hundreds of millions of dollars," but an official with the Iowa Farm Bureau gave a "back of the envelope" initial estimate of statewide damage of US$50 million.

 

CBOT oats futures ended higher. September oats ended up 4 1/4 cents at US$1.99 a bushel and December oats ended up 4 1/2 cents to US$2.12 1/2.

 

Ethanol futures were higher. September ethanol ended up US$0.002 at US$1.535 a gallon and November ethanol settled up US$0.019 at US$1.510.