CBOT Corn Review: Rallies On Wheat, Argentina Dryness

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CHICAGO (Dow Jones)--U.S. corn futures surged Wednesday on rallying wheat prices, a weaker dollar and worries about Argentina's crop.

December corn ended up 3.8%, or 21 3/4 cents, to $5.51 3/4 per bushel.

A 7% rally in wheat, due in part to concerns about crops in Australia and the U.S., fueled Wednesday's gains. A soggy harvest season in Australia has hurt the quality of the wheat there, and dry weather in the U.S. Plains has prompted concern about the winter wheat crop.

Wheat and corn are tied together because both are used as feed. Soybeans, which is tied to corn because the two compete for available acreage, also surged Wednesday as a weaker dollar lifted commodities generally.

Also supporting corn was a dry Argentina forecast. T-storm Weather meteorologist Mike Tannura said that while areas around Buenos Aires were getting thunderstorms Wednesday, the benefit to crops would be isolated.

"The end result is that major dryness deficits remain stable... through at least December 8 in Argentina," he said in a forecast. Rainfall deficits in some areas are 4 to 6 inches since Oct. 15, he said.

Analysts say that given a disappointing U.S. corn crop in 2010 and tightening supplies expected in 2011, the world cannot afford a poor crop from Argentina, the world's second largest producer.

Technically, the market pushed above key moving averages, including the 50-day, which could inspire more buying Thursday, analysts said.

While many analysts say the market still has upside due to tight supply projections, others note that export demand has sagged at prices above $5.50.

CBOT oats rallied Wednesday along with other grains. Oats for March delivery, the most active contract, was up 13 cents, or 3.7%, to $3.63 per bushel. Front-month December oats soared 8%, ending up $3.67 1/4.

Ethanol futures were higher. December ethanol closed up $0.018, or 0.9%, to $2.124 per gallon.

-By Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com



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