August 28, 2008

 

CBOT Corn Review on Wednesday: Inches higher on crude; storm eyed

 

 

A choppy Chicago Board of Trade corn futures market ended slightly higher Wednesday, as the market searched for fundamental news and eyed a tropical system that is still days away from hitting the U.S.

 

September corn ended up 2 1/4 cents to US$5.77 1/2 per bushel, December corn ended up 2 cents US$5.96, and March corn ended up 1 1/2 cents to US$6.15.

 

The trade is eyeing Tropical Storm Gustav, which could strike the U.S. Gulf Coast early next week. The storm could potentially hit oil infrastructure, which would send crude oil prices higher and provide a lift to corn as well, analysts said.

 

Traders are beginning to consolidate positions ahead of the long Labor Day weekend, and are more cautious because of the storm, whose path could remain unclear until the end of the week, traders said.

 

"It leads to uncertainty in terms of having the conviction to trade fundamentals," a trader said.

 

Crude oil, which climbed Wednesday on the hurricane fears, supported the market, traders said. Prices were several cents higher in early trading before retreating.

 

"I think the big thing is technicals broke down yesterday," Don Roose, president of U.S. Commodities in Des Moines, said of the drop.

 

Traders note that open interest has continued to drop, and that fund liquidation has remained a feature of the market. Wednesday was a "relatively light-volume day," a trader said.

 

The storm is being watched closely by traders, even though it is not expected to make landfall until Sunday at the earliest.

 

"As far as a strike on mainland North America, the chances are pretty high for either a tropical storm or a hurricane," said Mike Tannura, meteorologist with T-storm Weather.

 

Traders differ on the potential effects of the storm on corn in particular. Some say moisture from the storm could provide some needed rainfall in the U.S. corn belt, while others say it could damage corn near the coast and that any bearish effect from the moisture would be negated by a rise in crude oil.

 

Short-term weather was slightly bearish, traders said, as rainfall that moved across Iowa Wednesday figured to boost the crop.

 

CBOT oats futures ended lower. September oats were down 4 1/2 cents to US$3.50 1/2, December oats were down 4 1/2 cents to US$3.68 1/2 and March oats were down 5 cents to US$3.86.

 

Ethanol futures were higher. September ethanol ended up US$0.006 to US$2.354 and December ethanol ended up US$0.011 to US$2.301.