August 20, 2008
CBOT Corn Review on Tuesday: Higher close despite soybean drop
Chicago Board of Trade corn futures rebounded from an initial lower opening to close higher as traders remained concerned about warm, mostly dry weather hurting yield potential, analysts said Tuesday.
Most-active December corn added 11 3/4 cents to settle at US$5.84 1/2 a bushel, while September rose 11 3/4 cents to US$5.64 3/4.
Despite a late price drop in soybeans and wheat, corn held higher ground as technical buying and gains in crude oil kept support in the market, an analyst said.
Prices closed off their best levels of the session but managed to hold up fairly well, underpinned by concerns that rains forecast for this weekend won't be enough to provide widespread crop benefit. A lack of rain combined with corn lagging well behind in development is expected to produce at least mild crop stress, said Leo Burns, broker with I.R.A. Epstein & Co. in Chicago.
Rains have been hit-and-miss for some areas and more widespread rain is needed, which will help set the corn crop until the first frost, said Dax Wedemeyer, a broker/analyst with U.S. Commodities in West Des Moines, Iowa.
Corn's good-to-excellent rating held steady at 67% in the week to Aug. 17, after traders had expected a 1-2 percentage point decline. Illinois corn declined 3 percentage points during the week, while Iowa's improved 3 points.
Traders continue to hear reports of variable crop conditions in both the eastern and western belt, which adds to traders' concerns.
The eastern leg of the 2008 Pro Farmer Midwest Crop Tour found late plantings weighed on yield potential in a few fields surveyed in Indiana. While the corn conditions improved from Ohio, early wetness had affected the crop and development was behind schedule, participants said.
The western leg found more mature crops in Nebraska, with disease and insect pressure noticeably light.
Meanwhile, the trend in corn prices is "definitely up," said Wedemeyer, evidenced by the way the market opened lower and then rebounded to trade over 20 cents higher at one point during the session.
Technical buying supported corn as traders pushed the market up through buy stops and ultimately filled a gap left on the December chart from Aug. 4. December set nearly a 2 1/2-week high on the rally.
Funds were estimated to have purchased about 5,000 corn contracts on the day.
A weak U.S. dollar was also supportive as it makes corn cheaper for foreign buyers.
In other markets, September oats fell 6 1/2 cents to US$3.69 1/2 per bushel, while December dropped 6 1/2 cents to US$3.89.
Ethanol futures closed higher along with the gains in corn. September ethanol rose 1.8 cents to US$2.198 per gallon, and December ethanol gained 1 cent to US$2.19.