September 8, 2010

CBOT corn futures edge higher

US corn futures edged higher Tuesday (Sep 7), matching Friday's 23-month high, underpinned by solid demand and concerns about the size of the 2010 US corn crop.

The market managed to recover from early price weakness, as the uncertainty of yield and production remains a source of debate to keep a floor beneath prices, analysts said.

Harvest yield reports are pointing to lower output projections when the USDA releases its September crop report Friday.

Highly variable yields after a soggy summer that flooded out low-lying areas of many fields and hot night-time temperatures that deprived the crop of a chance to rest are keeping traders uncertain about 2010 crop potential.

Last week, US corn futures rallied to a fresh 23-month high after a closely watched private analytical firm projected the final US corn yield would be 3.9% below the government's most recent estimate. The forecast reaffirmed an emerging view in the industry that the crop will be weaker than first expected.

Otherwise a quiet news front promoted consolidative trading activity Tuesday, with traders not expecting a lot in the market until the USDA releases its production updates. Traders are expected to discount Friday's report on assumptions the crop is smaller than the USDA will report, Love added.

CBOT September corn ended 1 3/4 cents, or 0.4%, higher at US$4.51 1/2, and December corn finished 1 3/4 cents, or 0.4%, higher at US$4.66 1/4. Speculative fund buying was estimated at 5,000 lots. Fund activity is a measure of investment money flow in the market.

The USDA is scheduled to release its weekly crop progress report at 4 p.m. EDT, with analysts anticipating crop ratings holding steady or seasonally declining as much as 2 percentage points.