April 12, 2007

 

CBOT Corn Outlook on Thursday: Down 1-3 cents on e-CBOT, weather forecasts

 

 

Corn futures on the Chicago Board of Trade are seen starting Thursday's day session lower, taking its cue from overnight action, with forecasts calling for a more normal weather pattern applying pressure, despite strong weekly export sales data.

 

Analysts expect corn to open 1 to 3 cents lower.

 

In overnight electronic trading, May corn finished 2 3/4 cents lower at US$3.58, July corn was 2 1/2 cents lower at US$3.70 1/4, and December corn was 3 1/4 cents lower at US$3.84 1/2.

 

Weather remains the trump card of the market, and with 6-10 day forecasts pointing toward planting opportunities late next week, traders are expected to trim some weather premium, analysts say.

 

The unwinding of corn/soybean spreads were featured Wednesday and traders anticipate a mild continuation of that trend if weather forecasts continue to point toward mostly normal temperatures and below normal precipitation once the current wet, cold system moves through the Midwest, analysts added.

 

Meanwhile, strong weekly export sales data is seen limiting downside pressure, but traders said the sales reports are typically faded, as the commitments occurred in the previous week, a CBOT trader said.

 

A technical analyst said the market's next downside price objective is producing a close below solid chart support at US$3.70 basis July corn. Market bulls would gain better upside technical momentum by pushing prices above solid chart resistance at this week's high of US$3.85 1/2.

 

First resistance for July corn is seen at US$3.75 and then at US$3.78. First support is seen at this week's low of US$3.71 and then at 3.65.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for the western Midwest Thursday and early Friday. There is a chance for light to moderate precipitation through central and northern Missouri and southern Iowa later Friday into Saturday. Temperatures will average below normal. Mainly dry conditions are seen for Sunday and Monday, with temperatures averaging below normal Sunday, near to above normal west and below normal east Monday, Meteorlogix forecasts.

 

In the eastern Midwest, snow or rain may linger through northern areas Thursday, while turning drier through southern parts of the region. Mainly dry conditions expected for early Friday. Snow or rain develops through southern and east-central areas late Friday and continues Saturday. Temperatures will average below normal. Mainly dry conditions are seen for Sunday and Monday, with temperatures averaging below normal.

 

The Meteorlogix 6-10 day outlook for the Midwest calls for temperatures to average near to above normal west, and below normal in eastern parts of the region. Precipitation is seen near to above normal far west and south, and near to below normal elsewhere in the region.

 

The U.S. Department of Agriculture reported weekly corn export sales were 1,507,000 metric tonnes for the week ended April 5. Included in the total were sales of 181,400 metric tonnes for the 2007-08 marketing year. The 2006-07 sales were two-fifths times the previous week, and 73% higher than the prior four week average. Analysts had forecast sales between 600,000 and 850,000 metric tonnes. The principal buyers were Mexico with 403,300 metric tonnes and Japan buying 330,700 tonnes.

 

In other demand news, Taiwan's Members Feed Industry Group bought 60,000 metric tonnes of U.S. corn from trading house Cargill in a tender concluded Thursday, said an official with the group. The Korea Corn Processing Association, or Kocopia, bought 110,000 metric tonnes of optional-origin corn from trading house Louis Dreyfus in a tender concluded Thursday, an association official said.

 

Meanwhile, South Korean feedmillers are planning to buy 500,000 tonnes of feed corn over the next few days through a tender, two officials from South Korean feed companies told Dow Jones Newswires Thursday. The main reason for buying so much corn at one go is the fall in CBOT corn prices over the past several days, an official said.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled mostly lower. The benchmark September 2007 contract settled RMB14 lower at RMB1,676/tonne.