Overview
Chicago Board of Trade (CBOT) corn futures moved higher on Monday, underpinned by two main forces: firmer crude oil prices and concerns that persistent wet and cold weather is delaying spring planting across parts of the United States.
Market drivers
Traders are watching for the U.S. Department of Agriculture's weekly crop progress report to gauge planting activity. According to market commentary, some farmers in the central and eastern U.S. grain belt have not yet started planting corn and soybeans because of wet and cold conditions, a situation that is keeping attention on near-term supply prospects.
At the same time, strength in crude oil has provided additional support to grain prices. With corn and soybeans commonly used as feedstocks for biofuel production, upward pressure on oil has a knock-on effect on demand expectations for these crops, and that linkage was cited as a contributing factor to the corn gains.
Geopolitical and supply concerns
Oil prices climbed roughly 4% on Monday amid worries over potential supply disruptions tied to renewed tensions in the Gulf region. Reports noted that the United Arab Emirates said its air-defence systems were responding to a missile threat, and a fire broke out on a South Korean vessel. These developments in energy markets have supported broader commodity prices, including grains.
Price outcome
For specifics, CBOT July corn settled 5-1/2 cents higher at $4.85-3/4 a bushel on Monday.
What traders are watching next
Market participants remain focused on the upcoming USDA crop progress report to assess the pace of planting and any implications for supply and demand balances for corn and soybeans. Weather-related planting delays and energy market volatility are the immediate variables influencing market sentiment.