December 24, 2009

 

CBOT Corn Review on Wednesday: Climbs on storm, crude oil strength

 

 

Rallying crude oil and worries about a storm in the U.S. Midwest sent Chicago Board of Trade corn futures higher Wedneday.

 

March corn ended up 6 cents at US$4.04 3/4 per bushel and May corn ended up 6 cents at US$4.15 1/4.

 

The market was higher throughout the session amid the strength in crude oil, along with a weaker U.S. dollar and gains in soy and wheat.

 

A winter storm targeting the Midwest was also seen as supportive. The pre-Christmas storm comes as 5% of the crop--more than 600 million bushels--remain in the field, analysts noted.

 

While most of that corn will be harvested eventually, analysts say there could be yield losses of roughly 20% if it stays in the field all winter.

 

Farmers will be reluctant or unable to harvest their remaining corn as long as there's snow on the ground, analysts say. Yet if the snow melts, that will create muddy conditions that would also keep farmers' combines out of the field.

 

"No way for the harvesters to win," PFG Best analyst Tim Hannagan said in a market commentary. "It all sets up a fear the January crop report could come in very bullish."

 

The Jan. 12 crop report from the U.S. Department of Agriculture is usually the last word on the prior year's crop, but this year estimating the crop will be murky because of the late harvest, analysts said.

 

Long term, the market is firmly entrenched in a range between US$3.80 and US$4.25.

 

"Corn seems to want to stay in this range, in here, and I don't see what's going to take us out of it--at least for the next three months or so," said Joel Karlin, analyst for Western Milling.

 

He said weakness in the soy complex could weigh on the market, but that potential index fund rebalancing, and the perceived need to induce farmers to plant more corn acres in 2010, could be supportive factors.

 

The market will close early, at 1 p.m. EST on Thursday, and will be closed Friday for the Christmas holiday.

 

CBOT oats futures ended slightly lower. March oats ended down 1/2 cent at US$2.58 1/2 per bushel and May oats settled down 1/2 cent at US$2.66 3/4.

 

Ethanol futures were higher. January ethanol ended up US$0.016 at US$1.862 per gallon and March ethanol ended up US$0.016 at US$1.838.