U.S. corn futures closed near a 30-month high Friday as commodity funds re-entered the market amid expectations for prices to strengthen on long-term supply concerns.
Corn for March delivery, the most-active contract, finished up 6 1/4 cents, or 1%, at $6.48 3/4 a bushel at the Chicago Board of Trade. That was up 9% on the week and the highest close for a nearby contract since July 2008.
The markets rebounded on a late surge of fund buying after trading lower for most of the day session, traders said. Commodity funds had bought an estimated 9,000 contracts by the end of the session, a moderate amount, but were sellers of an estimated 5,000 contracts when prices were lower around midday, they said.
"Grains rebounded late in the session as speculative buyers returned to the pits," said Karl Setzer, analyst for Iowa-based MaxYield Cooperative.
The turnaround extended gains after prices rallied hard Wednesday and Thursday on a tightened supply outlook issued by the U.S. Department of Agriculture. Prices need to climb to curb demand and encourage plantings this fall, analysts said.
Futures prices for soybeans, which are planted in the same areas as corn in the spring, also are rallying in an attempt to buy acres. Soybeans for March delivery closed up 0.5% near a 30-month high at $14.22 1/2.
"It will be very difficult for corn or beans to steal acres way from the other," according to PFG Best, a commodities brokerage firm.
Hot, dry weather in Argentina, the world's second largest corn exporter after the U.S., has helped push corn and soybean futures above two-year highs. Much-needed rains are expected early next week, although permanent damage has already been done to some corn, meteorologists said. Traders remain nervous about the crop as production problems in Argentina will likely shift demand to the U.S.
"Nice rains to be seen through the middle of next week are not an overall pattern changer, as the continued presence of La Nina conditions should quickly take Argentina back into below normal rainfall for late next week and beyond," Freese-Notis Weather said in a forecast.
In other markets, U.S. ethanol futures advanced slightly with corn futures on strong demand expectations. Ethanol for March delivery ended up 0.3 cent, or 0.1%, at $2.349 per gallon.
Oat futures retreated on profit-taking, a trader said. Oats for March delivery lost 4 1/2 cents, or 1.1%, to $3.92 a bushel.
