Corn futures at the Chicago Board of Trade rallied to their highest level in nearly 2 weeks on Thursday as investment funds continued to buy commodities amid a global gold market that remains on fire, traders said.
"Obviously, gold breaking to new 25-year highs and crude coming back were main factors for the gains. No one wants to jump in front of the breakout in other commodities," said James Barnett, an analyst for Man Global Research.
Corn closed 1-1/2 to 7-3/4 cents per bushel higher, with May up 7-3/4 cents at $2.37-3/4 per bushel. July was up 7 at $2.47.
Volume was estimated by the exchange at 132,053 futures and 32,666 options. That compared with 148,646 futures on Wednesday.
Traders said funds bought 5,000 lots and there was good demand by investors for the December 2008 corn contract. Aggressive buying of corn calls and selling of puts in the corn options pit also contributed to the advances in corn futures prices on Thursday, the traders said.
Traders said the market was obsessed with the continued strength in inflationary indicators, with precious metals and crude oil markets continuing to surge. The persistent jumps in outside markets trigger additional investment fund demand for commodities such as corn.
New York COMEX June gold rallied more than $20 to $728 per ounce early in the day and was holding to roughly $15 per ounce gains as CBOT corn futures closed at 1:15 pm CDT (1815 GMT).
Crude oil also continued its march higher, with US prices closing above $73 per barrel. The demand for corn-based ethanol and speculative buying of soyaoil in anticipation of a burgeoning biodiesel industry continues to contribute to investor buying of corn and soyaoil futures. Funds bought 7,000 to 8,000 lots of soyaoil on Thursday.
Support for corn also was stemming from chilly weather in parts of the US Midwest that was slowing growth and development of the corn crop, especially in the northern portion of the western Midwest crop region.
"There is a chance of frost and light freeze conditions for northern Iowa, southern Minnesota into south-east South Dakota and north-east Nebraska ... between now and Tuesday," said Meteorlogix forecaster Mike Palmerino.
A solid number for corn in the US Department of Agriculture's weekly export sales report also lent support.
USDA said export sales of US corn last week totalled 1.13 million tonnes (old and new crop), above estimates for 700,000 to 950,000 tonnes.
There was nothing in the export hopper overnight to give corn futures a lift. Taiwan passed on a tender to buy 23,000 tonnes of US corn.
Traders noted some position-squaring ahead of Friday's USDA May supply/demand reports. Analysts pegged US old-crop corn ending stocks at 2.255 billion and the new crop at 1.523 billion.
Deliveries Thursday on the May contract were at 1,979 lots, with scattered stopping of the corn. Registrations with the CBOT dropped to 2,771 lots from 2,900.
Cash basis bids in the Midwest on Thursday were steady to firm amid slow farmer selling.
Technical support in the July contract was at $2.38 per bushel. Resistance at $2.43 was broken, driving the contract to a session high of $2.47-1/2.
Oat futures closed unchanged to 2-3/4 cents per bushel higher, with July up 2-3/4 at $1.91-3/4.
Oats volume was estimated at 727 futures and 11 options.