20000326CBOT corn ends higher on short covering

CHICAGO: Corn futures at the Chicago Board of Trade closed higher on Friday on apparent short covering after a week in which spot prices fell about 8 cents per bushel.

Recent rain in the Midwest prompted much of the selling early in the week. But the long-term forecasts for hot, dry weather in the Midwest this spring and summer had traders cautious about holding onto short positions.

"The trade wants to be long going in spring planting," said Tim Hannagan, head grain analyst for Alaron Trading Corp.

He said projected corn ending stocks appear adequate now, but should long-term forecasts prove accurate and this year's crop is hurt, those stocks could quickly shrink to dangerous levels. He said before the 1988 drought, corn stocks were estimated at 4.2 billion bushels and corn prices peaked in July at $3.59 per bushel before slipping to finish that year between $2.80 and $3.00.

This year, 2000 ending stocks are projected to be 1.74 billion bushels, assuming normal weather.

"There is no margin for error in this corn market," he said.

The U.S. Midwest corn and soybean states should receive modest amounts of rainfall over the next several days, but more was needed throughout the spring to ensure a healthy crop, said Hannagan.

Corn futures closed 1-1/2 to 2-1/2 cents higher on Friday but were lower for the week. CBOT May corn closed at $2.32 per bushel, up 1-3/4 cents for the day, but down from $2.40-3/4 a week ago. November corn closed Friday at $2.53-1/4 per bushel, up 1-3/4 cents, but down from $2.59-3/4 a week ago.

Prudential Securities led buyers with about 800 May and 200 July contracts, followed by Refco with 700 May and 300 December. Selling was spread among several firms with Produce Grain the largest seller with about 600 May, traders said.-Reuters