April 21, 2006

 

CBOT Corn Outlook on Friday: Called 1 cent lower on weather outlook

 

 

Corn futures at the Chicago Board of Trade are expected to begin open auction trade 1 cent lower Friday as forecasts for drier weather next week in the U.S. Midwest could aid corn planting, sources said.

 

In overnight e-CBOT trading, May corn slipped 3/4 cent to US$2.35, July fell 1 1/4 cents to US$2.46 1/4, and December lost 1 cent to US$2.68 1/2.

 

The market should start out easier with the forecast for drier weather next week in the corn belt which should help with the corn planting pace, a floor-based commission house analyst said.

 

The weather is the "name of the game" at this time of the year and its bearish right now, a floor trader said.

 

On daily technical price charts, there is a gap below the US$2.45 level in July that the market has remained above for quite a while and July is near the top end of that gap, the floor trader added.

 

Outside markets are mixed and don't look to have the impact they had on Thursday, the trader noted.

 

Next week's weather pattern indicates a shift allowing for less rainfall in the north-central U.S., where conditions have been too wet for fieldwork and planting, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest, mostly dry conditions are forecast from Tuesday-Thursday next week after light rain in the northern sections and scattered showers and thunderstorms of 0.25-1.00 inch in the south on Monday, DTN Meteorlogix Weather said. In the 6-to-10 day outlook, the forecast is for precipitation to average near to below normal.

 

In the eastern U.S. Midwest, dry conditions with a few light showers north on Sunday and Monday are expected, before scattered showers and thunderstorms develop on Tuesday ending on Wednesday. Amounts of 0.25-1.00 inch are expected. Dry conditions return on Thursday.

 

In the 6-10 day outlook temperatures are forecast near to below normal while precipitation is forecast near to below normal north and near to above normal in the southern sections of the region, DTN Meteorlogix Weather said.

 

On technical charts, July corn remains bound by strong overhead resistance at US$2.55 and the top of an upside price gap at US$2.45. If bulls can push it above the April high of US$2.55, that could suggest another run up in prices, a technical analyst said. If the bears can fill on the downside the upside price gap from US$2.45 to US$2.39, then the bears would gain solid downside technical power to suggest a sideways to lower trend, he noted. First resistance is seen at Thursday's high of US$2.50 and then at US$2.53 1/2, First support is seen at US$2.45 and then at US$2.42 1/2.

 

In other news, corn futures on China's Dalian futures exchange ended lower on the overall bearish market for animal feed, analysts in China said. The January contract settled RMB14 lower at RMB1,388/tonne.