August 22, 2009

CBOT Corn Review on Friday: Firm on short covering; bullish outside markets

Corn futures at the Chicago Board of Trade on Friday closed slightly higher but nearer the session low.

Tepid short covering was featured in a market that is still overall technically bearish and amid an impending big U.S. corn crop, said an analyst.

December corn closed up 2 1/4 cents a bushel at US$3.26 1/4. September corn closed up 3 1/4 cents at US$3.21 3/4.

The key "outside markets" were in a bullish posture for the grain futures Friday. The crude oil futures market was higher, the U.S. dollar was lower against other major currencies and the U.S. stock indexes were higher. "That's a formula for higher grain prices," said Victor Lespinasse, longtime grain market analyst with www.grainanalyst.com.

The Pro Farmer Midwest Crop Tour on its last leg Thursday found an average Iowa corn yield of 180.97 bushels an acre, which compares to last year's yield of 168.33 bushels and a 3-year average of 165.20 bushels an acre. The bigger Iowa yield estimate from the tour is not surprising, said Lespinasse. "Traders figured Iowa (yields) would be bigger and Illinois (yields) would be smaller," he said.

The crop tour also found an average Minnesota corn yield of 185.31 bushels an acre, which compares to last year's yield of 178.35 bushels and a 3-year average of 170.79 bushels an acre.

Pro Farmer Friday afternoon released its estimates of the U.S. corn crop. The advisory service pegged the 2009-10 U.S. corn crop at 12.807 billion bushels, with an average yield of 160.1 bushels an acre. However, Pro Farmer cautioned that its estimates assume a "normal" finish to the crop-growing season. USDA pegged the U.S. corn crop at 12.761 billion bushels in its latest report, with an average yield of 159.5 bushels an acre.

The latest extended weather forecast from the National Weather Service has flip-flopped on its temperature expectations for the Corn Belt. The NWS forecast for Aug. 26-30 now calls for below-normal temperatures across the Corn Belt, accompanied by above-normal precip. "Another round of rains would be welcome in most fields, but cooler temps won't help the crop with maturity," said an analyst. Indeed, the cooler forecast has increased speculation of an early killing frost in parts of the Corn Belt.