U.S. corn futures climbed Friday, rising on the threat of weather problems trimming yield and acreage prospects.
The market retraced a portion of the week's prior declines, as traders added risk premium back in the market ahead of an extended holiday weekend. U.S. futures markets are closed Monday in observance of the Memorial Day holiday.
The uncertainty of weather and what impact planting delays in the eastern Midwest and northern plains will have on corn acreage and yield enticed traders to sustain weather premium in the market, said Chad Henderson, analyst with Prime Ag Consultants in Brookfield Wis.
Traders weren't comfortable taking risk premium out of the market, with well-advertised crop problems opening the door for further price gains.
A tight supply scenario in the U.S. places increased pressure on U.S. farmers to produce bumper crops in 2011, with federal forecasters already projecting supply tightness despite farmers planting more acres than a year ago.
Weather forecasts calling for warmer and drier weather in the Midwest next week will aide planting prospects. However, if the dry forecast next week turns wet over the weekend, there is potential for sharply higher prices Monday night, analysts said. Alternatively, if the dry stretch is to be realized, there is downside risk, analysts added.
Solid near-term demand, with cash supplies tightening, added to the firm tone. Commercial grain elevators have raised bids for corn in an attempt to secure grain with the potential for less-available supplies from eastern corn-belt areas.
Nevertheless, despite the gains in prices Friday, futures remained lower for the week, with improved planting outlooks for next week limiting advances, Henderson added. CBOT July corn ended up 1.7% at $7.58 1/2 a bushel.
U.S. wheat futures ended in the green, managing to recover from a midday slide as continued threats to U.S. plantings and dryness plaguing key growing areas of the southern Plains and Europe underpinned prices. Minneapolis Grain Exchange July climbed 10 1/2 cents to $10.56 1/4 a bushel, CBOT July wheat gained 5 1/4 cents to $8.19 3/4 and Kansas City Board of Trade July added 1/4 cent to $9.43.
U.S. soybean futures finished lower, erasing the week's earlier advances, as traders booked profits in the absence of fresh supportive news. CBOT July soybeans settled down 0.4% at $13.79 3/4.
CBOT July soymeal settled 1.3% lower at $355.60/short ton and July soyoil end down 0.2% at 58.61 cents/pound. U.S. rice futures settled at a three-week high Friday. The advances were fueled by concerns about rains and floods hurting output in the southern U.S. CBOT July rice climbed 5 cents, or 0.3%, to $15.18 1/2 per hundredweight.
Oat futures ended higher, climbing with neighboring grains amid planting issues in the northern plains and Canada. July oats were up 1.3% at $3.82 3/4 a bushel. Ethanol futures finished higher, driven by support from corn futures. July ethanol futures settled up 0.7% at $2.662 a gallon.