Corn futures up

Corn futures at the Chicago Board of Trade rose nearly 3 percent on Wednesday rallying to a 2-1/2-month high by the close on weather worries and a surge in wheat, traders and analysts said. "Dryness in the eastern Corn Belt is the story, I think the market wants to see better rains in the east," said Dan Cekander, analyst for FIMAT USA.
"Some of the forecasts are maintaining the same pattern of above-normal rain in the north-western half of the Corn Belt and below-normal in the east and the market is starting to get concerned about it," he said.
Traders said near-limit gains in wheat futures amid shrinking global stocks and wet weather that was causing problems in the US winter wheat harvest also gave corn futures an extra boost. CBOT corn closed up 8-1/2 to 11-1/2 cents per bushel, with July up 11 at $4.04-1/2 per bushel. New-crop December was up 9-1/2 at $4.15 per bushel.
Traders said funds bought from 7,000 to 8,000 lots. Bull-spreading gave nearby July a lift relative to the deferred months with FIMAT USA a noted bull-spreader of 3,000 lots of July/September, traders said. That contributed to the huge number of contracts traded. An estimated 349,363 futures and 75,867 options traded, up from the 333,164 futures and 62,121 options traded Tuesday.
Most of the moves stemming from the options pit were bearish as commercial firms sold July call options ahead of expiration on June 22, traders said. An upturn in crude oil markets also gave corn futures a boost because of the close relationship between corn, ethanol and the energy sector. However, the bottom line for the corn market remained the less-than-ideal weather patterns in the US Corn Belt, especially in the eastern half of the US Midwest crop region.
The US Midwest continued to see a wetter pattern in the western region while the east was dry, increasing stress to young corn and soybean plants, a forecaster said Wednesday.
And that trend should stay the same through early next week along with warm temperatures as highs stay in the mid-80s to low-90s degrees Fahrenheit through the weekend. Extended outlooks for the six- to 10-day period were mixed with the US weather forecasting model calling for a wetter, cooler pattern.
"In the other corner we have the European model, which would suggest that is not going to happen - that we are going to maintain the current pattern," said Mike Palmerino, forecaster with DTN Meteorlogix. Palmerino said he was leaning toward the European forecast. US farmers have planted the largest corn area since 1944 to take advantage of 10-year high corn prices amid the surging demand for corn from the ethanol industry.
Global feed grain observers are banking on a record large US corn crop this year but at least average crop weather will be needed to attain that goal. Exports were quiet overnight and early Wednesday, while cash basis bids in the Midwest were firm amid slow farmer selling.
Technical traders watched the July contract break above its 100 day moving average of $3.99-1/4, touching off buy-stops. July is now above all key moving averages and the nine-day relative strength index closed at 68. The nine-day relative strength index is at 61. Traders view an RSI of 70 or more as an overbought market and 30 or less as an oversold market.
Oat futures closed 2 to 4-1/2 cents per bushel higher, with July up 2 at $2.93 per bushel. The strength in corn was supportive along with worries about shortages of other feed grains, like barley, traders said. Volume was heavy estimated at 1,752 futures and 23 options.