May 1, 2008

 

CBOT Corn Outlook on Thursday: Up 3-5 cents on continued planting delays

 

 

U.S. corn futures are expected to open 3-5 cents a bushel higher as another weather system begins to move into the Midwest and sets back planting even further, analysts said Thursday.

 

In addition, overall strength in the grain and soybean markets amid higher calls for soybeans and wheat contribute to the supportive price influence.

 

In overnight electronic trading, May corn rose 6 cents to US$6.06 1/4 a bushel, July was up 4 cents at US$6.16 1/4 and new-crop December added 4 1/4 cents to US$6.32 1/2 a bushel.

 

Weather concerns are once again the driving theme of the market and a supportive influence, analysts said.

 

"It's the continuing theme of planting delays providing underlying support," said John Kleist, broker/analyst at Allendale in McHenry, Ill.

 

In the western corn belt, light showers are expected through northern areas later Thursday. Showers and thunderstorms totaling 0.30-1.50 inches of rain are forecast through Friday night, with clearing skies Saturday and mostly dry conditions Sunday and Monday. Temperatures will be below normal to much below normal Sunday and near normal Monday, DTN Meteorlogix said.

 

The eastern belt will be mostly dry Thursday with a chance of showers Thursday night. Showers and thunderstorms are forecast Friday with possibly lingering rains in the east on Saturday. Totals in the eastern belt will also be 0.30-1.50 inches.

 

The six- to 10-day Midwestern outlook calls for near- to below-normal readings, with near- to above-normal rainfall.

 

While some localized areas of the corn belt have been able to plant, widespread seedings are still not anticipated with more rain on the way.

 

Traders also continue to roll positions out of May and into July and other contracts, although total open interest has been declining in recent days. Open interest Tuesday was down more than 20,000 lots and Wednesday had shrunk another 17,000 contracts, which may indicate a lack of fund conviction on the long side of the market, Kleist said.

 

"We have yet to build open interest on this up move. We're not picking up new longs," he said.

 

In export news, weekly sales were a bit below expectations at 551,200 metric tonnes for the 2007-08 marketing year, down 29% from the previous week, while 44,800 tonnes were sold for 2008-09 delivery, the U.S. Agriculture Department reported. The trade had expected sales in a range of 600,000 to 950,000 tonnes.

 

Shipments totaled 1,003,700 tonnes, down 10% from the previous week and 13% below the prior four-week average. The top destinations were Japan with 308,100 tonnes, South Korea with 227,700 and Mexico at 125,500 tonnes.

 

In other news, U.S. House Majority Leader Steny Hoyer, D-Md., said Wednesday that a possible deal to cut ethanol subsidies, currently at 51 cents a gallon, reached by lawmakers during Farm Bill negotiations could help lower rising food prices. The deal calls for a 6-cent cut to the subsidy to ethanol producers. Final agreement on the Farm Bill could be reached this week.

 

Corn deliveries totaled 396 lots on the second day of the delivery period, issued by Cargill. Tenco was the largest stopper at 174 lots.

 

In other markets, the U.S. dollar is firm against the euro, while crude oil and gold futures are trading lower.