May 7, 2008

CBOT Corn Outlook on Wednesday: Corn seen up 3-5 cents on rainy weather

Chicago Board of Trade corn futures are expected to open 3-5 cents a bushel higher Wednesday on overnight gains and rainy weather that is delaying planting in the U.S., traders said.

In overnight trading, May corn was up 6 1/4 cents to US$6.01 per bushel, July corn was up 3 1/2 cents to US$6.09 3/4 and December corn was up 3 1/2 cents to US$6.27.

A trader said the corn fundamentals remain bullish and will limit any retreat in prices. He did note, however, that the dollar was stronger overnight, which could prompt some large funds to get out of corn and other commodities.

"The thing that worries me is that we're continuing to unwind some of these longs," the trader said.

The bulls' next upside price objective is to push and close prices above solid technical resistance at the July contract high of US$6.28 1/4, according to technical analyst Jim Wyckoff. The next downside price objective for the bears is to push and close prices below solid support at US$5.83. First resistance for July corn is seen at US$6.10 and then at US$6.15. First support is seen at US$6.00 and then at Tuesday's low of US$5.95.

Traders said rainy weather continues to be an issue as farmers in the U.S. corn belt look for opportunities to plant their crop. A system moving from the west that is crossing Illinois Wednesday morning could dump as much as two inches of rain in eastern parts of the Midwest Wednesday and Thursday, according to DTN Meteorlogix.

The DTN Meteorlogix said there will no upcoming periods of sustained dryness. Another system will drop between 0.25 and 1 inch of rain across the Midwest Saturday and Sunday, and yet another rain system will arrive by the middle of next week.

The U.S. Department of Agriculture said in its crop progress report that plantings were at 27%, well below the five-year average of 59%. Traders and analysts say that around May 10 or May 15, yields typically start dropping for late-planted corn.

Mike Palmerino, a meteorologist with DTN Meteorlogix, said in his forecast that the brief periods of dryness could give farmers some opportunities to plant, since the stronger spring sunshine can dry moist soils rapidly.