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CBOT corn ends up on short covering, soybean gains

CHICAGO: Corn futures at the Chicago Board of Trade closed higher on Wednesday on a short covering recovery from the break in prices Tuesday with players keeping a wary eye on long-term US weather prospects, traders said.

A late fund-related rally in the soy complex also buoyed corn to the day's highs near the close.

Corn closed 2 to 2-1/2 cents higher with May up 2-1/2 at $2.34-1/2.

"Corn got pulled down a little too far yesterday by wheat and I think it just needed to come back a little," said Dale Gustafson, analyst for Salomon Smith Barney, referring to the short covering bounce in corn.

Futures slumped on Tuesday for a second straight session following substantial weekend rains in the Midwest that touched off commodity fund selling.

The rainfall followed a US government warning last week of drought this spring in the Midwest corn and soybean growing region, which was reinforced by the National Weather Service 30- to 90-day forecast released last Thursday. The market was also supported by a slow down in farmer selling in US cash markets. Basis bids in Midwestern markets early on Wednesday were mostly steady to higher. But gains are seen capped by forecasts for more rainfall in the Midwest.

Weather Services Corp. meteorologist Joel Burgio said significant rainfall was likely late this week in the Midwest, with 0.25 inch to 1.00 inch likely across 50 to 70 percent of the key corn and soybean states.

Another wave of thundershowers was likely by the middle of next week, with the rainfall concentrated in the western and southern portion of the US Midwest.

On the export front, South Korea's National Livestock Cooperatives Federation passed on tenders on Wednesday to buy 30,000 tonnes of US No. 3 corn due to high prices.

Turkey's state grain board said on Tuesday it would tender on March 29 for up to 300,000 tonnes of corn from the United States, Hungary and Romania to meet domestic demand, with up to 200,000 tonnes of US origin.

Technical traders Wednesday cited support in the May at $2.30 and resistance at $2.35-1/4.

Funds bought 500 lots. FIMAT Futures bought 400 May and sold 100 May, Rand Financial bought 200 May, Prudential Securities bought 100 September and 100 December, Produce Grain sold 1,000 May, Iowa Grain sold 400 May and Tenco Inc. bought 300 May and sold 600 May. Cargill Inc. sold 2,000 May $2.30 puts at 5 cents.

Corn futures volume was estimated by the CBOT at 45,000 lots, below the 64,740 lots traded Tuesday.

Corn options volume was estimated at 15,000 lots.

-Reuters