May 13, 2008

 

CBOT Corn Outlook on Tuesday: Down 3-5 cents on weather, profit-taking

 

 

Chicago Board of Trade corn futures are expected to open 3-5 cents lower on improved weather forecasts and profit-taking, a trader and an analyst said.

 

In overnight trading, May corn was down 4 1/2 cents to US$5.99 per bushel, July was down 3 3/4 cents to US$6.11 and December was down 4 1/2 cents to US$6.33 1/4.

 

Traders said downward pressure is coming from weather forecasts calling for less rain in the U.S. corn belt over the next couple weeks.

 

"It looks like they might be able to get (some planting) done," one trader said.

 

Shawn McCambridge, senior grains analyst for Prudential-Bache in Chicago, said if the corn belt sees only scattered showers over the next two weeks as forecast, plantings could be 80% complete by next week and completely finished by the end of the month.

 

"Scattered showers, as long as the soil is firm enough to support machinery, is probably not going to deter farmers too much," he said.

 

Although corn growers had completed 51% of their plantings through Sunday, up from 27% the week before, they are still behind the five-year average of 77%, according to the U.S. Department of Agriculture's crop progress report issued Monday. States that are especially behind include Missouri, with 34% completed versus the five-year average of 83%, and Minnesota, with 32% completed versus the 82% average.

 

Iowa has completed 46% of its plantings, up from 18% the week before but down from the five-year average of 82%. Illinois was at 61% completed, up from 36% the prior week but below the average of 88%.

 

The market is in a wait-and-see mode right now, McCambridge said. With corn prices still at or above US$6.00, the absence of significant news will continue to prompt some investors to take profits now, he added. Overnight losses were preceded by a drop of 12-15 cents Monday.

 

"This is healthy, for the market to squeeze out some of the weaker positions," McCambridge said.

 

The next upside price objective is to push and close prices above solid technical resistance at the July contract high of US$6.37 1/2, according to a technical analyst. The next downside price objective is to push and close prices below solid support at US$6.00, according to the analyst.

 

First resistance for July corn is seen at US$6.20 and then at Monday's high of US$6.25, the analyst said. First support is seen at Monday's low of US$6.13 3/4 and then at US$6.10.