December 13, 2008

 

CBOT Corn Review on Friday: Surges on forecast for fewer acres

 

 

A private firm's report projecting a cutback in 2009 planted acreage lit a fire under Chicago Board of Trade corn futures Friday, as the market ended with its strongest gains of the week.

 

March corn ended up 22 cents to US$3.73 1/2 and May corn ended up 22 1/4 cents to US$3.84 3/4 per bushel. The March contract gained 64 1/4 cents on the week.

 

The report, from analytical firm Informa Economics, projected that farmers would cut corn acreage by 3.6 million acres, to 82.29 million, and plant more soybeans. The report said corn prices have fallen more sharply than soybeans, and also cited high input costs as a factor in producers' decisions.

 

"It was another excuse to extend the rally that began yesterday," a broker and analyst said.

 

The market is in an increasingly strong technical position, traders and analysts said, and bulls were already encouraged because corn had limited losses despite sharply lower crude oil. Friday's higher close, and the strong gains for the week, have reinforced the notion that corn has set a short-term bottom, traders said.

 

Traders said it's too soon to place much weight on the numbers, but that they nonetheless sparked the rally.

 

"If the trade wants to give them that much respect, they're friendly numbers," the trader said.

 

Although corn is in a strong position technically, a couple of analysts questioned how long the rally would last. They said the rally has not attracted new buyers, and that volume has remained low. Thursday's USDA supply and demand report also demonstrated corn's problems with weak demand, which will continue to weigh the market, they said.

 

Argentina's corn planting will fall to 2.44 million hectares this season, 200,000 hectares less than its forecast last week, the Buenos Aires Cereals Exchange said Friday. Area is seen down sharply from the 3.2 million hectares planted with corn last season.

 

CBOT oats futures ended higher. March oats ended up 4 cents to US$2.13 1/2 per bushel and May oats ended up 4 cents to US$2.23. A trader said the market was supported by corn, but gains have been limited by some fund selling and light commercial selling.

 

Ethanol futures ended higher. January ethanol ended up US$0.028 to US$1.546 per gallon and March ethanol ended up US$0.028 to US$1.560.