April 28, 2008

 

CBOT Corn Outlook on Monday: Up 13-15 cents on adverse weather, grain strength

 

 

U.S. corn futures are expected to rally 13-15 cents a bushel at the open Monday as cold, damp Midwestern weather continues to delay planting and amid overall strength in the grain and soybean pits, analysts said.

 

The market is expected to follow strong overnight gains that saw May add 15 1/4 cents to US$5.92 1/2, July up 15 cents at US$6.05 3/4 and new-crop December up 15 3/4 cents to US$6.22 1/2 a bushel.

 

Soybeans are called 10-to-15 cents higher and wheat is seen up 10 to 12 cents on overnight strength.

 

Although areas from eastern Illinois through central and northern Indiana to Ohio received less-than-expected rainfall over the weekend, the rest of the Midwest continues to be cold and wet, thus keeping farmers from planting.

 

In addition, the cool weather is not conducive for seed that has already been planted, which adds to the concerns.

 

"The driving force is the cold weather but also the wet weather. Even the stuff that's in the ground, is it a big advantage, I don't know?" said Don Roose, president of U.S. Commodities in Des Moines.

 

Parts of the western corn belt received 0.25-1.00 inch of precipitation early in the weekend, mostly through southwestern and central Minnesota and extreme eastern Iowa. The eastern belt received the same amount of precipitation through Illinois and Wisconsin, with scattered precipitation elsewhere in the region, DTN Meteorlogix said.

 

The western belt will be mostly dry through Wednesday, with below- to well below-normal temperatures through Tuesday and above normal in the west and below normal for eastern areas on Wednesday. Light rain or thunderstorms are possible on Thursday and Friday.

 

The eastern corn belt may see light rain or drizzle Monday, with mostly dry weather Tuesday and Wednesday. Light rain is possible in northern and western areas on Thursday, with dry weather in the balance of the region. Showers and thunderstorms are possible Thursday and Friday.

 

The six- to 10-day outlook for the entire Midwest calls for near- to below-normal temperatures and near- to above-normal rainfall.

 

"It looks like the extended forecast boils down to two- or three-day stretches of planting and not under optimal conditions. There will be work done is spotty areas, but to get a wholesale start you're probably going to need a five-day stretch of warm, windy weather," said Roose.

 

In other news, China's corn futures rose Monday as funds' interest turned to the corn market as producers shift acreage from corn into soybeans this year both domestically and globally. Volume in the corn pits was heavy.

 

Traders are also keeping their eyes on a potential resumption of a farmers' strike in Argentina as a potential supportive price influence. Soybeans are more directly impacted by such a strike, but corn may generate spillover support as a result.

 

Technically, July corn closed slightly higher Friday but near session lows. The bulls' hold on the market is fading, yet no serious chart damage has occurred, an analyst said.

 

The next objective is for bulls to push July and close above US$6.00 resistance, while bears will likely try and press prices below support at US$5.83 a bushel, he said.