Corn Hits 52-Week High: Market Bits


NEW YORK (TheStreet) -- Corn prices retreated Thursday after reaching a 52-week high earlier in the session in anticipation of shrinking inventories.

Corn for May delivery closed at $7.60 ¼ a bushel, down 0.4%, pulling back after scaling to a peak of $7.73 ¼ earlier in the session.

One main reason for the retreat was concern over Japan's ability to import corn after the country was hit by another earthquake on Thursday.

"That caused shock in entire commodity pit today," MaxYield Cooperative analyst Karl Setzer said. "We also saw some profit-taking ahead of tomorrow's planned stockpile report ... corn futures are finding pressure after setting new highs in recent trade as values have quickly become overpriced in the world market."

The U.S. Department of Agriculture is expected to release estimates for corn inventories Friday, and a Bloomberg survey of analysts indicates that the government could slash its estimate for corn stock on Sept. 1 by up to 13%. This, as demand for ethanol and livestock feed accelerates.

There are some questions, however, about whether the grain report will actually be released tomorrow, given the possibility of a government shutdown at midnight on Friday.

Corn inventory on March 1 fell 15% from a year ago, the government reported last week.

Ethanol producer Pacific Ethanol ( PEIX) was falling 2.6% to 53 cents, while grain transporter Archer Daniels Midland ( ADM) was down 0.6% to $36.33.

Corn processor Corn Products International ( CPO) was falling 1% to $51.57, while meat processor Tyson Foods ( TSN) was losing 0.3% to $19.24.

Weaker corn export sales had also exerted some pricing pressure for the May contract. The USDA on Thursday reported that net corn sales for the March 25 to 31 period was 619,600 metric tons, down 68% from the previous week. "Not only has export interest dipped to its lowest level in four weeks, but we are seeing indications domestic usage is slipping as well," said Setzer.


May wheat futures fell 1.1% to finish trading at $7.73 1/2 a bushel on the possibility that favorable planting conditions were returning to the big winter wheat-producing parts of the United States, many of which have been suffering from drought.

"When you start see chances of rain, you see risk premium pulled out of the futures commodity market," Setzer said. "They're just reducing their risk premium in case those forecasts do come true." Even a slight change in forecasts can trigger a response from the markets.

The analyst said that Russia's decision to re-enter the wheat export market was also putting pressure on wheat futures. The country had banned wheat exports since last August as they conserved wheat during their own wheat drought.

Weather.com says showers and thunderstorms are developing in Kansas, isolated severe thunderstorms are forming in northern Oklahoma, and windy conditions are to be expected in western Texas.

But AccuWeather.com warns that fire danger for the major winter-wheat producing states of Kansas, Oklahoma and Texas may persist through the weekend due to dryness and windiness.

"Very little relief from the drought is in sight. Above-normal average temperatures are rampant across the region, and little rainfall is expected over the next week or so," according to AccuWeather.com

Food stocks were trading in mixed territory. Sara Lee ( SLE) was up 0.7% to $18.31, General Mills ( GIS) was down 0.6% to $35.97 and Kellogg ( K) was falling 0.5% to $54.

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-- Written by Andrea Tse in New York.

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