May 12, 2008

 

CBOT Corn Outlook on Monday: Up 1-2 cents on overnight gains, weather

 

 

Chicago Board of Trade corn futures are expected to open 1-2 cents a bushel higher Monday on overnight gains and wet weather that continues to hamper planting in the Midwest.

 

In overnight trading, May corn was up 1/4 cent to US$6.18 3/4, July was up 1 3/4 cents to US$6.31, and December was up 2 cents to US$6.52.

 

Although much of the U.S. corn belt will be dry Monday and Tuesday, heavy rains last week and on the weekend will still prevent many growers from getting into the fields to resume planting, said Don Roose, president of U.S. Commodities in Des Moines, Iowa.

 

"The fields are just soft, and they won't support heavy machinery," Roose said.

 

He said it will probably take another day or two of dry weather before planting can resume.

 

Corn prices set contract highs for the second straight day Friday, although prices ended down slightly. Technical analyst Jim Wyckoff noted the price action late last week produced a bullish upside "breakout" from a sideways trading range that had lasted weeks.

 

The next upside price objective for bulls is to push and close July corn prices above solid technical resistance at Friday's contract high of US$6.37 1/2, Wyckoff said in a report. The next downside price objective for bears is to push and close prices below solid support at US$6.15. First resistance is seen at US$6.34 and then at Friday's high of US$6.37 1/2. First support is seen at Friday's low of US$6.23 1/4 and then at US$6.20.

 

Roose said the government's supply and demand report on Friday, which projected ending corn stocks will drop from an estimated 1.383 million bushels in 2007-08 to 763 million bushels in 2008-09, helped push prices higher late last week and could continue to do so.

 

"I think what the government report is saying is that the balance table is too tight, and we're going to have to ration demand greatly," Roose said.

 

He said he expects this afternoon's USDA crop progress planting report to show 50% of plantings complete, about 25% below average. Traders have cited estimates ranging from 40% to 60%.

 

In international news, China announced it exported 30,000 metric tonnes of corn in April, according to preliminary data issued by the General Administration of Customs Monday, down 95% on year. The country exported 110,000 tonnes of corn in the first four months, down 96.9% on year, the data showed.