Sunny day for corn, ethanol

Corn and ethanol haven’t had a lot of good news in the last few months but for Monday, at least, the clouds parted.

Into the last hour of trading on the Chicago Board of Trade, March corn futures are up 14 cents per bushel to $3.74. Soybeans aren’t doing badly, either, up 13 cents on March contract to $9.58.

Both commodities have struggled in recent weeks on news of big crops pending in Brazil and Argentina.

Meanwhile ethanol producer Green Plains Renewable Energy of Omaha, which operates plants at Shenandoah and Superior, checked in with fourth quarter earnings of $23.3 million and full year earnings of $20 million, reversing losses in 2008 and confirming the momentum ethanol producers say they’ve had in recent weeks as corn prices have dropped below $4 per bushel and forecasts for driving demand are up.

Green Plains’ stock was up $2.46 per share in the last hour to $16.60, a gain of almost 20 percent.

The rally in corn hasn’t dampened the surge in hog prices, which are up a cent to 70.4 cents per pound on the front-month futures contract in Chicago. Cattle are down, however, by a half cent per pound to 92 cents.

How strong this little rally will be remains to be seen. Corn prices have a history of following oil prices, which are up today above $80 per barrel. But eventually high corn prices cut into ethanol margins.

Then there’s still the matter of the South American crop, not to mention a 1.6 billion overhang in the U.S. for his year’s crop. Des Moines broker Tomm Pfitzenmaier urges caution, noting the rising prices will bring surplus from last year out of the bins and push prices back down.”

“There is going to be heavy selling resistance overhead,” Pfitzenmaier said. ” There is plenty of corn available in the U.S. and the South American corn will be available in another 3 or 4 weeks. Plus, don’t forget that the South African crop is being harvested. The good crops in the southern hemisphere have not been confined to South American; South Africa is looking at good crops too.”

source: desmoinesregister