April 27th, 2007, filed by Christine Stebbins
    
    Rain is usually bearish for corn prices. “Rain makes grain,” runs an old adage on LaSalle Street — but not at planting time.
    Rain, and forecasts for more, had the bulls running in the CBOT corn market at mid-week as worries mounted that farmers would not be able to plant all the record-breaking acreage of corn they have planned for this spring.
    Midwestern farmers typically plant corn from mid-April to mid-May. But a wet, cold spring has really put them behind. The damper Mother Nature is putting on fieldwork this spring is especially critical this year with mushrooming demand for corn from ethanol plants projecting monthly records stretching years out into the future.
    However, with outlooks for drier weather heard on Thursday and Friday, corn prices fell back and closed the week only  3-1/2 cents per bushel higher.
    Weather and volatility should continue to go hand in hand, with volatility building as the season progresses. As one grain analyst said on Friday: “It’s going to be weird all summer.”
    All eyes will be on the government’s weekly crop progress report due on Monday afternoon. Traders expect USDA to report that about 24 percent of the corn crop is planted, behind the five-year average near 40 percent by the end of April.
    Wheat got a lift from concerns that dryness in Europe and a spring freeze across the U.S. winter wheat belt cut yields. The final answer will come at harvest which starts early June.
    In the meantime, doubts fed price volatility with Chicago wheat prices trading above $5 a bushel, and at premium to Kansas City — something that rarely happens since KCBT prices reflect a higher quality wheat than Chicago.
    The annual U.S. wheat quality crop tour begins next week. So millers, exporters, government officials, farmers and others will be walking wheat fields in the top wheat state of Kansas to see just how bad the crop was hurt by a hard spring freeze.
    They’ll also be checking for diseases as rains over the last couple weeks could be causing problems like fungus.
    Soybeans still just follow wheat and corn along. Bottom line for beans: if farmers can’t get all their corn acres in or they plow up damaged wheat fields to plant another crop, the result will surely be more soybeans planted than originally forecast. Soy planting starts after corn seeding ends.
    These same factors will play into the markets next week. Watch the latest weather forecast as it will dictate how the market moves. Most forecasters Friday were pointing toward a dry weekend. But there’s some question about next weekend.

–First day deliveries against the May contract are Monday. 
–Weekly trade data issued Friday from the Commodity Futures Trading Commission showed that commodity funds remained net short by a small margin in CBOT wheat futures, increased their longs in corn, and cut their longs in soybeans. Fund trading positions were close to expectations, but they were a little longer in corn and cut their net long soybean position more than analysts estimated. That could lend some support to soy in Sunday night electronic trade. But the weather forecast will be the main driver of all Chicago markets.