April 3, 2008

 

CBOT Corn Outlook on Thursday: Up 1-2 cents on overnight gains

 

 

Chicago Board of Trade corn futures are expected to open 1-2 cents a bushel higher on expected spillover support from higher wheat and soybean futures and follow-through buying from record gains, analysts said Thursday.

 

Nearby May corn overnight rose 1 3/4 cents a bushel to US$5.97 1/2, and July added 2 cents to US$6.11 1/4. New-crop December gained 1 1/2 cents to US$6.04 1/2.

 

While the frenetic pace of corn buying may slow down Thursday after the run to a fresh round of record highs Wednesday, and December corn's close above US$6 a bushel for the first time, traders are still mostly bullish on the market.

 

Bryce Knorr, senior editor at Farm Futures, looks for a stronger open in corn on the heels of the record gains and the return of significant fund activity to the market.

 

"Hedge funds returned...in a big way in the wake of Monday's bullish USDA reports, and buyers were out in full force yesterday. Open interest grew by more then 16,000 contracts yesterday in heavy volume, a sign of new longs coming into the market," Knorr said in his morning comments.

 

Chart traders are eyeing the US$6.37 area as a short-term target for December corn, "if the market can confirm its move over US$6 with a good close today," he said.

 

In news, weekly export sales for the week to March 27 came in just above expectations to total 945,700 metric tonnes, which may be supportive for prices, a trader said. Analysts had expected sales of 500-900 tonnes.

 

Sales for the 2007-08 marketing year totaled 704,400 tonnes and were up 11% from the previous week but just 1% above the prior four-week average, the U.S. Agriculture Department reported, while 2008-09 sales reached 241,300 tonnes.

 

Corn shipments totaled 1,145,600 tonnes, down 11% from the previous week and the prior four-week average.

 

Weather remains critical if farmers are to get into their fields and begin to plant the 2008-09 crop, particularly in southern areas of the corn belt. But cool, wet conditions over the next few days are expected to prevent that from occurring.

 

The Ohio River Valley, and the middle and lower Mississippi River Valley are expected to receive another round of heavy rainfall over the next few days, which means more flooding of low-lying fields and the major rivers, private forecaster DTN Meteorlogix said.

 

In the western belt, light to locally moderate precipitation is expected from eastern and southern Nebraska and southern Iowa across northern Missouri Thursday, with drier conditions setting in on Friday. More rain may develop in northern areas Saturday night, with episodes of light to locally moderate precipitation Sunday through Tuesday.

 

In the eastern belt, episodes of showers are forecast through southern and southeastern areas Thursday and Friday, with totals of 0.50-2.00 inches and locally heavier amounts possible. Central areas of the eastern Midwest may also see showers. Drier conditions are expected on Saturday and into Sunday, except for light showers in the north Sunday and Monday. Another round of showers is expected on Tuesday, Meteorlogix said.