April 30, 2008

 

CBOT Corn Outlook on Wednesday: Up 1-2 cents on overnight gains

 

 

U.S. corn futures are expected to open 1-2 cents a bushel higher on follow-through buying from overnight gains and spillover support from expected firmer soybean and wheat futures, analysts said Wednesday.

 

May corn on the Chicago Board of Trade rose 1 1/4 cents to US$5.92 1/2 in overnight electronic trading, July was up 1/4 cent at US$6.04 3/4 and new-crop December was up 1/2 cent at US$6.22 1/2 a bushel.

 

Futures prices posted a slight technical bounce from a lower close Tuesday, which is expected to be supportive at the pit open, but it remains to be seen how much follow-through buying will be generated from the modest overnight gains, an analyst said.

 

New-crop December corn set a record high of US$6.37 1/2 in the pit Tuesday but finished lower at US$6.22 a bushel. While Tuesday's action fell short of a bearish technical reversal, Japanese candlestick charts reveal a bearish engulfing pattern, which may lead to further selling interest.

 

Despite the bearish technicals, chances for additional rainy weather and continued planting setbacks may keep potential selling to a minimum.

 

"We seem to have most of the bullish now factored in for now, and the longer range forecasts are still calling for cool, damp weather so I would think we'd continue to find some underlying support," an analyst said.

 

Warmer, drier weather dominates the corn belt Wednesday, which will lead to pockets of planting activity, analysts said.

 

Despite an end to cool conditions, widespread planting is unlikely through early next week, private forecaster T-storm Weather said in morning commentary. Rain is expected to affect most areas of the corn belt from Thursday through Saturday, though a "dry slot" will prevent heavy totals into the western belt, it said.

 

For next week, meteorologists are trying to determine if rain over the Plains will move into the corn belt, as signals remain mixed.

 

"Recent history and the overall pattern suggest it is best to continue with rain chances. An end to the general pattern is unlikely due to unseasonable cold across northern Canada, T-storm Weather said.

 

Meanwhile, trading may be subdued in the grains and other key markets ahead of the Federal Reserve's decision on interest rates, expected as the grain markets close at 2:15 p.m. EDT. The Fed is widely expected to trim rates by 25 basis points.

 

Corn deliveries were smaller than expected at 198 lots on first notice day, when the trade was looking for about 1,000-2,000 lots. Cargill's Seneca, Ill., facility issued 111 contracts and its Hennepin, Ill., plant issued 85 contracts. ADM delivered two contracts. Alaron was the largest stopper at 67 lots, with Barclays Capital second at 52 lots. J.P. Morgan stopped 39 corn contracts.

 

Chinese corn futures climbed Wednesday on strengthening demand and shrinking supplies as farmers have been busy planting and not marketing their grain, leading to increased processor needs.

 

In other key markets, the U.S. dollar is firmer in early activity, while crude oil futures are higher and gold is lower.