May 8, 2008

 

CBOT Corn Outlook on Thursday: 2-to-4 cents higher on weather concerns

 

 

Chicago Board of Trade corn futures are expected to open 2-to-4 cents higher Thursday on continued concerns about weather in the U.S. corn belt.

 

In overnight trading, May corn was up 3/4 cent to US$6.02 1/2 per bushel, July was up 2 1/4 cents to US$6.15 1/4 and December corn is up 2 3/4 cents to US$6.33 1/4. December corn is 4 1/2 cents off its all-time high, set last week.

 

A trader expects choppy trading Thursday, a continuation of the sideways path the market has traveled in recent weeks. Many are awaiting Friday's supply and demand report from the U.S. Department of Agriculture, which will be released at 8:30 a.m. EDT.

 

"The numbers are major tomorrow," he said.

 

Despite well-above-normal rainfall across the U.S. Midwest this spring which has prohibited planting in several regions, traders said they aren't expecting significant changes to the USDA's acreage or yield projections.

 

Another trader said recent gains on record-high crude oil prices and planting delays have been tempered by a stronger dollar, but the dollar's retreat overnight could open the door for a rally.

 

"We could have a 20-30 cent rally in corn easily," he said.

 

The next upside price objective for bulls is to push and close prices above solid technical resistance at the contract high of US$6.28 1/4. 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 Wednesday's high of US$6.18 and then at this week's high of US$6.22. First support is seen at Wednesday's low of US$6.08 and then at US$6.05.

 

Weather remains key to the market, as growers look for opportunities to finish their plantings. The USDA crop progress report showed 27% planted nationally, down from a five-year average of 59%.

 

The forecast from DTN Meteorlogix calls for more rain over the next several days. A system moving from the south through the Midwest is dumping rain over much of Illinois, Indiana and Ohio this morning. A weekend system could drop 0.50 to 2 inches of rain across the Midwest, and another rain system is expected by the middle of next week.

 

Traders said growers typically want to have their crop planted by mid-May, as sowing after that can cause yields to start to decline.

 

"It's getting ridiculous," a trader said of the weather.