August 22, 2008


CBOT Corn Review on Thursday: Stout gains, buoyed by commodity rally



Speculators continued to find favor with commodities, lifting Chicago Board of Trade corn futures back above US$6 for the first time in nearly three weeks as the U.S. dollar notched sharp losses.


CBOT nearby September corn rose 22 1/2 cents to US$5.97 3/4, and most-active December added 22 1/2 cents to settle at US$6.17 1/2 a bushel.


Concerns about inflation taking a further toll on the U.S. economy put downward pressure on the dollar, and large speculative traders reacted by buying commodities en masse, brokers said. A weak dollar is supportive for commodities as it makes them cheaper for foreign buyers.


The grain and soybean markets had seen "some pretty aggressive liquidation" pressure in recent weeks and investment money came pouring back in Thursday, said Shawn McCambridge, senior grains analyst at Prudential Bache in Chicago.


And with all of the major commodity indexes "screaming higher" the rally becomes hard to ignore and corn bulls responded, he said.


In addition to the resurgence of investor buying, corn futures also gained on a lack of selling interest and on ideas that current rainy weather in the Midwest might not be enough to satisfy the thirsty crops.


Mike Tannura, a forecaster at T-Storm Weather, said one weather model shows a significant rain event across the corn belt for the the middle and end of next week. This would certainly benefit the crop but may be a bit too late for corn that is currently filling kernels. There is also concern that lagging maturity levels will make the crop susceptible to an early frost this year.


The weather model still keeps the eastern corn belt much drier than the west, after which a warmer and drier pattern is shown, Tannura said.


On Friday, traders may begin to even positions ahead of the weekend and after such lofty gains this week, and McCambridge said he wouldn't be surprised to see hedge pressure develop as well as producer think about selling their last bit of grain in the bins ahead of the harvest.


In other news, corn export sales for the week to Aug. 14 were less than expected at 691,500 metric tonnes, below the range of 850,000 to 1.4 million tonnes the trade had anticipated. A total of 494,900 tonnes were sold for the 2008-09 crop year, while 196,600 were sold for 2007-08, the U.S. Department of Agriculture said.


Export shipments improved, however, and totaled 1,090,500 tonnes, a 16% gain from the previous week and up 15% from the prior four-week average. Japan took the most corn at 303,300 tonnes, with South Korea second at 211,800 and Mexico at 198,600 tonnes.


Funds were estimated to have purchased 9,000 corn contracts.


The 2008 Pro Farmer Midwest Crop Tour will wind up in southern Minnesota Thursday evening and will announce final results Friday at 10 a.m. EDT.


In other markets, CBOT oats climbed with the rest of the trading floor. September oats finished 8 1/2 cents higher at US$3.76 1/2 per bushel, and December closed up 8 1/2 cents at US$3.96.


Ethanol futures were stronger. September ethanol rose 12 cents to US$2.398 per gallon, and December ethanol jumped 10.6 cents to US$2.377.


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