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CBOT corn ends up at 6-1/2 month high on weather

CHICAGO: Corn futures at the Chicago Board of Trade closed higher Tuesday and May marched to a 6-1/2 month high on fund buying and concerns over weather conditions in the US Midwest growing region.

Corn closed 3 to 7-1/4 cents higher with May up 7-1/4 at $2.38. May reached a session high of $2.38-1/4.

"We need to have a weather premium in the market in case the drought continues to develop into the growth and development phase of the corn and soyabean crops," said Ben George, trading specialist for LFG.

The market early this week was buoyed following a US government forecast for drought in the Midwest this spring, when seeding takes place. There had already been talk in the market that warm, dry weather had left soil moisture levels at critically low points in several key Midwest crop regions.

Timely rainfall was needed to ensure proper germination of the crop, crop experts have said.

But there was a reminder on the export front of the stiff competition faced by the United States, especially from China.

South Korea's Korea Corn Processing Industry Association bought 105,000 tonnes of Chinese corn on Tuesday.

South Korean traders said the growing price gap between Chinese and US corn was likely to push grain buyers there to buy more corn from China this week. On Monday, they quoted Chinese corn at around $107 per tonne cost-and-freight, while US corn was above $120 due to rising freight costs. Meanwhile, Weather Services Corp. said early Tuesday that mostly light rain was noted along the Ohio River eastward across much of the eastern crop areas, bringing a trace to 0.25 inch of rain and locally heavier amounts in a few areas.

Planting season is approaching, and with no excessive soil moisture, a lack of snow, and often mild temperatures, planting will likely get off to an early start, WSC said.

Rainfall will shift southeastward into eastern areas and the Ohio Valley Thursday, WSC said. Dry weather was expected Friday then scattered showers were likely over the western areas on Saturday, WSC said.

Funds bought 10,500 lots. Prudential Securities bought 3,000 May, R.J. O'Brien bought 3,000 May, Refco Inc. bought 2,000 July, 1,000 May and sold 600 May, Goldenberg Hehmeyer sold 1,400 May and ADM Investor Services sold 1,500 May and bought 400 May.

Corn futures volume was estimated by the CBOT at 137,000 lots, above the 99,132 lots traded Monday.

Corn options volume was estimated at 35,000 lots.-Reuters