CBOT Corn Outlook: Higher On South America Crop, Acreage Worries

U.S. corn futures are expected to open higher Monday amid concerns about the South American crop and whether U.S. farmers will plant enough acres in 2011 to stave off a supply crisis.

Chicago Board of Trade futures are expected to open 3 to 5 cents higher. In overnight trade, corn for March delivery was up 5 cents, or 0.8%, to $6.01 1/2 per bushel.

Prices settled Friday at its highest close in 28 months, with the rally fueled by a report by private analytical firm Informa Economics. Informa cut its 2011 planted corn acreage estimate by 2.5% to 90.8 million.

While that would be up 2.6 million from 2010, many traders think the increase “has to be closer to 5-6 million” said Don Roose, president of U.S. Commodities in Des Moines, Iowa. A disappointing 2010 crop and strong demand has pushed 2011 ending stocks projections to precariously low levels, according to some analysts.

Adding to the market’s support is hot, mostly dry weather in Argentina, the world’s second-biggest crop producer. Hot temperatures during the crop’s crucial pollination season are a threat to yields.

“I think the feeling is that’s threatening not only to the corn but also the soybeans,” Roose said of the Argentina weather.

Meanwhile, prospects for strong demand into 2011 continue following the government’s extension of the 45-cent-per-gallon ethanol blenders credit. Roose also noted that feed demand seems unlikely to abate following Friday’s cattle-on-feed report from the U.S. Department of Agriculture.

Although prices have not yet topped the bull-market high of $6.05 per bushel set in November, the market has upward technical momentum following last week’s climb, analysts said.

The environment for commodities generally seems supportive Monday, Roose said. Crude oil and precious metals are higher, and wheat are soybeans also gained overnight.

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