May 7, 2009

 

CBOT Corn Outlook on Thursday: Up 4-6 cents on crude, wet weather

 

 

Chicago Board of Trade corn futures are expected to open higher Thursday on outside market support and continued anxiety about planting progress in the U.S. corn belt.

 

Corn is called 4 cents to 6 cents higher. In overnight trade, July corn was up 6 1/4 cents to US$4.13 3/4 per bushel and December corn was up 5 3/4 cents to US$4.32 1/2.

 

Concerns about the slow planting pace, particularly in the eastern corn belt, remain a key driver of the market, traders and analysts said.

 

"Corn is going to be supported by a little bit of a change in the forecast, and little wetter in the eastern belt than it was yesterday," an analyst said.

 

A floor trader said rain in eastern areas Wednesday were supportive, and have the trade looking at another week of relatively week progress in Monday's U.S. Department of Agriculture crop progress report.

 

"We seem to get open weather forecasts, but then the planting window shrinks," a floor trader said. The issue is taking on greater urgency because the optimal planting period will pass during the next couple weeks.

 

Outside markets are supportive, traders said. Equities are poised to climb amid optimism that the recession is easing, and crude oil continues to post strong gains. Crude oil is tied to corn because of corn's ties to ethanol and the energy market.

 

A trader said crude oil's strength "helps offset negativity as it pertains to feed demand."

 

Export sales were lower than expected. The U.S. Department of Agriculture reported weekly sales of 611,100 metric tonnes, down from 1.341 million metric tonnes last week.

 

Analysts had expected sales between 700,000 and 1.3 million metric tonnes. Weekly sales had consistently topped 1 million metric tonnes during the past several weeks, giving the market underlying support.

 

The next upside price objective is to push and close July prices above solid technical resistance at the April high of US$4.17 1/2 a bushel, a technical analyst said. The next downside price objective for the is to push and close prices below solid technical support at US$3.85 a bushel.

 

First resistance for July corn is seen at Wednesday's high of US$4.09 1/2 and then at this week's high of US$4.13 3/4, the technical analyst said. First support is seen at Wednesday's low of US$4.02 1/2 and then at US$4.00.