April 17, 2007

 

CBOT Corn Outlook on Tuesday: 2-3 cents higher start on weak planting pace

 

 

Chicago Board of Trade corn futures are expected to begin trading 2 to 3 cents higher Tuesday as a weaker-than-expected corn planting pace in Monday's U.S. weekly crop progress report is expected to supply support to prices, analysts said.

 

In overnight electronic trading, May corn gained 2 3/4 cents to US$3.67 cents per bushel, July rose 3 cents to US$3.79 and December gained 2 3/4 cents to US$3.93. E-CBOT volume in May was 3,026 contracts.

 

Corn should draw support from Monday's planting progress report, though the potential for rapid planting this week should temper the gains, a commission house analyst said.

 

Monday, the U.S. Department of Agriculture reported that 4% of the U.S. corn crop was planted as of April 15, below the 8% planted last year and slightly beneath analyst expectations of 5%-8% planted.

 

The market may also draw support from stronger wheat prices, the analyst said. Wheat is expected to open moderately higher on a sharp decline in wheat conditions as recent poor weather has negatively impacted the crop as it emerged from dormancy.

 

Corn may see some price strength from longer term weather forecasts, a floor analyst said. Although the near-term weather forecast is expecting mostly dry conditions this week, longer term weather outlooks are predicting wetter conditions for the U.S. Midwest next week, which could limit the amount of corn planted, the floor analyst noted.

 

In the western U.S. Midwest, dry weather is expected Wednesday and Thursday with the potential for a few light showers Thursday night, DTN Meteorologix Weather said. Temperatures are expected to average near normal Wednesday and near-to-below normal Thursday.

 

In the eastern sections of the region, dry weather with only a few light showers are possible Wednesday with dry weather also expected Thursday, Meteorologix Weather said. Temperatures are predicted to average near-to-below normal Wednesday and below normal Thursday.

 

In the 6-to-10 day weather outlook, Meteorologix Weather expects temperatures to average near-to-below normal west and near-to-above normal east. Precipitation is forecast near-to-above normal.

 

On daily technical charts, July corn prices closed lower Monday but look for choppy trading conditions on conflicting weather forecasts, a market technician said. Market bears' next downside price objective is closing prices below solid support at last week's low of US$3.61 1/4, while a close above last week's high of US$3.85 1/2 would help the bulls regain upside technical momentum, the technician added.

 

First resistance for July is seen at Monday's high of US$3.80 1/2, and then at US$3.85 1/2. First support is seen at US$3.72 1/2 and then at US$3.70.

 

In other corn news, corn futures on China's Dalian Futures Exchange settled slightly higher with the September contract up RMB3 at RMB1,661/tonne.