July 29, 2008

 

CBOT Corn Review on Monday: Up on export demand, bullish weather prospect

 

 

Chicago Board of Trade corn futures closed higher for the third consecutive trading day Monday amid the threat of higher temperatures in the western U.S. corn belt and increased export demand.

 

September corn closed up 4 3/4 cents at US$5.82 a bushel, December corn closed up 4 3/4 cents at US$6.01 1/4 and March closed up 4 3/4 cents at US$6.20 3/4.

 

The threat of hotter temperatures hitting the western U.S. corn belt later in the week is inducing traders to keep a weather premium in the market, analysts said.

 

Higher temperatures will center on the western and central corn belt later this week, according to private weather forecaster T-storm Weather. The most intense heat, however, should occur just "west and south of concentrated corn."

 

"We're only talking about a very small portion of the corn belt," said Drew Lerner, an agricultural meteorologist at World Weather Inc. "As long as we keep getting some timely showers, it may still be a fine production year."

 

Still, the risk of crop stress in the western fringes of the corn belt is possible, he said.

 

Increased export demand also was supportive Monday, traders and analysts said. The recent break in prices has made corn more attractive to end-users.

 

"They (end-users) had seen US$8 corn and now they're seeing US$6 (corn)," said Dale Durchholz, an analyst for AgriVisor.

 

Demand from ethanol producers and livestock users is also increasing as they move to take advantage of the US$2 break in prices, said Jerry Gidel, a grain analyst at North America Risk Management Services.

 

Traders and analysts cited strong figures from the U.S. Department of Agriculture's export inspections as signs of increasing demand.

 

The USDA reported export inspections of corn at 39.027 million bushels for the week ended July 24, up from 29.831 million bushels the preceding week.

 

"We had a pretty solid export inspection," said Gidel. "It's the best one we've had since June 26."

 

Excessive rains pounding portions of Iowa and Missouri also provided modest support Monday, analysts said.

 

"People are starting to get concerned about the extent of the rain impact we've had in northern Missouri and southern Iowa," said Gidel. "That does have an impact on potential nitrogen loss."

 

Nitrogen loss can occur when water sweeps away fertilizer from farmland.

 

Traders expect U.S. corn rated good to excellent to remain unchanged or increase up to two percentage points in the weekly USDA crop progress report. The report will be released at 4 p.m. EDT.

 

Despite a potential rise in the good-to-excellent condition, there is a "long ways" to go before the crop is put in the bin, said Gidel.

 

CBOT oats futures were higher. September oats were up five cents at US$3.89 a bushel, December oats were up 5 1/2 cents at US$4.07 and March oats were up 5 1/2 cents at US$4.26.

 

Ethanol futures were higher. September ethanol was up US$0.071 at US$2.456 a gallon and December ethanol was up US$0.066 at US$2.459.