April 13, 2007

CBOT Corn Outlook on Friday: Up 1-2 cents on e-CBOT, planting uncertainty

Corn futures on the Chicago Board of Trade are seen starting Friday's day session on firm footing, continuing the overnight theme, with uncertainty surrounding planting progress underpinning prices.

Analysts expect corn to open 1 to 2 cents higher.

In overnight electronic trading, May corn finished 1 3/4 cents higher at US$3.60 1/2, July corn was 1 cent higher at US$3.72 1/2, and December corn was 1 1/2 cents higher at US$3.88 3/4.

The uncertainty of potential planting progress next week amid speculation of how long it will take farmers to resume seeding activity as warmer and drier conditions move into the Midwest are expected to support corn, analysts say.

Light trade consolidation following Thursday's setback is seen adding support, with technical features expected to play a key role in activity as well, traders said. Otherwise, corn/soybean spreading and the rolling of May positions are seen as key objectives in Friday's trade, traders added.

A technical analyst said Thursday's high-range close in July corn reinforces the notion that a near-term market low was posted in early April. The next downside price objective is producing a close below solid chart support at Thursday's low of US$3.61 1/4. Bulls would regain 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 US$3.65 and then at US$3.61 1/4.

The DTN Meteorlogix Weather Service forecast said snow and rain in the western Midwest will be mainly confined to Missouri Friday through early Saturday. Precipitation should be light to moderate in northern Missouri, moderate to heavy in the south. Mainly dry conditions are on tap for Saturday and Sunday. Temperatures will average below or much below normal Friday and Saturday, and near to below normal Sunday.

In the eastern Midwest, mainly dry conditions are seen for Friday, with a chance for rain south and far north Friday night and Saturday. Dry conditions are expected Sunday. Rainfall of 0.50-1.50 inches should occur mainly south of a line extending from St. Louis to Dayton. Rainfall and some mixed precipitation is possible through central Illinois and central Indiana but this should be light. Temperatures will average below or much below normal.

The Meteorlogix 6-10-day outlook for the Midwest calls for temperatures to average near to below normal, with precipitation near to above normal west, and near to below normal east.

China's government may allocate fresh corn export quotas of 1.2 million metric tonnes in the near future, a report by the Shanghai-based commodity analysis firm JCI said Thursday. JCI said the quota could be the first batch of corn export quotas, and that more could follow later.

Argentine corn prices climbed on the week as tight spot supplies and solid demand from exporters boosted prices at the Rosario Grain Exchange. Farmers are scrambling to harvest soybeans before the crops over mature and are putting off the corn harvest, according to analysts. Heavy rainfall over the past two weeks had prevented fieldwork and some soy is at risk of deteriorating if not harvested fast.

In overseas markets, corn futures traded on the Dalian CHommodity Exchange settled lower. The benchmark September 2007 contract settled RMB8 lower at RMB1,668/tonne.