April 17, 2008

 

CBOT Corn Outlook on Thursday: Up 2-5 cents on sales, planting delays

 

 

U.S. corn futures are expected to open 2 to 5 cents a bushel higher on speculative buying in the Chicago grain and soybean pits, overnight gains to record highs in crude oil, strong export sales and a continuation of Midwestern planting delays, analysts said Thursday.

 

Chicago Board of Trade corn was higher overnight, with nearby May up 4 1/2 cents at US$6.08, July up 3 3/4 cents at US$6.20 3/4 and December 4 1/2 cents higher at US$6.30 1/4 a bushel.

 

Speculative buying linked to key markets such as crude oil are expected to be supportive for corn. May crude leapt to a record top of US$115.54 a barrel in overnight trade.

 

Stout export sales also grabbed traders' attention and are expected to bolster prices.

 

"Export sales were near the top end of expectations and we also had some daily sales to Japan and Mexico that should help us out here," an analyst said.

 

Sales for the week to April 10 totaled 921,600 metric tonnes, the U.S. Agriculture Department reported. Sales of 868,900 tonnes were reported for 2007-08 and 53,600 tonnes were for the 2008-09 marketing year.

 

The 2007-08 sales were 83% higher than the previous week and 36% above the prior four-week average, the USDA said. Analysts had expected corn sales in a range of 600,000 to 900,000 tonnes.

 

Corn shipments for the week totaled 1,112,200 tonnes, which were down 11% from the previous week and 14% below the prior four-week average.

 

In addition to the weekly sales, the USDA also announced sales of 170,688 metric tonnes to Japan for 2007-08 and 110,400 tonnes of corn to Mexico. Of the total, 22,080 tonnes are for 2007-08 delivery and 88,320 are for 2008-09.

 

Wet weather is moving over the western corn belt, affecting the eastern half of Nebraska and the western half of Iowa.

 

"With a significant storm system moving into western Iowa this morning, planting delays should continue to dominate trader sentiment," said Bryce Knorr, senior editor at Farm Futures.

 

"Most of the corn belt should get wet, keeping planting at a minimum into early next week when another front could move through," he said.

 

In fact, weather maps suggest a series of storms could develop over the next two weeks, with the highest rain totals in northern, eastern and southern areas of the Midwest, Knorr noted.

 

The weather pattern over the next week to 10 days suggests cold conditions for the northern Plains and the northwestern Midwest, with cool conditions extending south into the Mississippi Valley, according to DTN Meteorologist Bryce Anderson. Storms are expected to track across the central Plains through the Midwest bringing more cool and wet weather to the southeastern Plains, the Midwest and Delta.

 

"Thus, corn planting will further be delayed into the last week of April," Anderson said.

 

Technically, bulls still have the advantage in July corn, with their next upside objective to close above resistance at the contract and all-time high of US$6.28 1/4 a bushel, an analyst said. For bears, the next objective is to close below solid support at last week's low of US$5.96 3/4.

 

First resistance is put at US$6.22 1/2, then US$6.28 1/4, while support is uncovered at US$6.13 1/2 and then at US$6.10 a bushel, he said.