20000206

CBOT corn closes higher as soyabeans rally

CHICAGO: Corn futures at the Chicago Board of Trade closed higher on Friday on short covering tied to a late turn to stronger levels in soyabeans, traders said.

Support also was seen coming from action by USDA to close a certain gap in the government farm programme.

Corn closed 1-3/4 to 3 cents higher, with March up 1-3/4 at $2.19-3/4.

Traders said the corn market had been oversold for the near term, which led to the late short covering. Nearby March early fell to a session low of $2.14-1/4, a 3-1/2 week low.

Some said the market rebounded following news the USDA would amend its loan deficiency payment programme to prevent producers from unfairly enlarging their payments. USDA planned to eliminate the ability of some producers to lock in prices in their home area while moving grain to ports and claiming a higher loan rate there.

But gains in corn were limited as conditions for corn and soyabean acreage in South America improved after widespread rainfall this week, meteorologists said. This was considered more of a factor for soyabeans.

But persistent dryness since the start of the planting season has taken a toll on crops, reports indicated. The U.S. Agriculture Department's Argentina attache's office late Thursday lowered its forecast for the 2000 Argentina corn crop to 15 million tonnes from 15.5 million.

"The lack of rainfall in the eastern areas has already caused notable damage to the corn crop, with short plants and poor pollination observed in areas closer to (Buenos Aires)," the attache's report said.

The USDA's official estimate for Argentina's crop is 15.5 million tonnes, compared to 13.5 million in 1999. Argentina ranked second worldwide in corn exports in 1998/99 at 7.8 million tonnes, compared to 50.31 million for the United States.

Chicago trading firm RJ O'Brien & Associates said March corn has the potential to decline to $2.09-1/4 to fill a gap on daily charts. March corn fell as low as $2.16 overnight, its lowest price since Jan. 18.

"Weekly studies are on the verge of crossing lower from their most overbought levels in two years," the firm said in a report Friday. "Closing below $2.08 would break down below the bottom of the previous bull channel and target $2.00."

Cargill Inc. sold at least 2,000 March and 2,000 May on the day, Farmers Commodities Corp. bought 1,000 March, FIMAT Futures sold 700 March and Carr Futures sold 800 March.

Corn futures volume was estimated by the CBOT at 70,000 lots, above the 64,496 lots traded Thursday.

Corn options volume was estimated at 24,000 lots.-Reuters