Corn futures at the Chicago Board of Trade closed higher on Wednesday on a climb in crude oil and talk of shipping problems at an Argentine port, traders said. "They were talking about crude oil bouncing back and shipping problems out of an Argentine port that was holding up March corn shipments," a trader said.
CBOT corn closed 1 to 4-1/2 cents per bushel higher, with March up 3-1/4 at $4.15-3/4 per bushel. New-crop December was up 2-3/4 at $4.09-1/4. Volume was estimated at 173,578 futures and 43,497 options, down slightly from the 187,732 futures and 45,608 options.
Corn's tight relationship with the energy sector amid the surging growth of ethanol left it vulnerable to volatility in crude oil markets, traders said. US crude futures jumped more than a dollar on Wednesday as domestic crude supplies fell unexpectedly by 4.8 million barrels in the week to last Friday amid fog delays at the Houston Ship Channel, according to government data. Corn futures stayed strong overall around current price levels with the spot March contract holding roughly a dime to 15 cents above the $4.00 per bushel mark, a key psychological support area. Bellwether new-crop December also is above the key support level, closing at $4.09-1/4 per bushel.
Traders awaited release on Friday of USDA's March supply/demand reports but analysts expected little change in the balance sheet for corn and were looking ahead to the key March 30 US plantings report.
Price direction in the corn futures market for the balance of 2007 will be determined by the amount of land US farmers plant to corn, spring planting and summer growing weather and the demand for corn from the export, livestock and ethanol sectors.
Export news was quiet overnight. Mexico has opened a 1.4 million-tonne import quota for US yellow corn for animal feed, a Mexican trade official said on Tuesday. Also, Mexico is likely to join Canada in a complaint to the World Trade Organisation about US corn subsidies, but that should not affect the corn futures market for the near-term. Crop weather is satisfactory in South America and the United States.
Abundant winter precipitation in the US Midwest has recharged soil moisture reserves, boosting prospects for a rapid start for the soon-to-be-seeded crop.
Deliveries on the March contract Wednesday were light at 172 lots and the cash basis for corn was steady in Midwest and weak on the river amid quiet exports. Technical support in the May contract was at $4.17 per bushel and resistance at $4.36-1/4.
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