May 14, 2009

 

CBOT Corn Outlook on Thursday: Down on profit-taking, weather next week

 

 

Chicago Board of Trade corn futures are expected to open slightly lower Thursday on profit-taking and prospects for improved weather next week, analysts said.

 

Corn is called 1 to 3 cents lower. In overnight trading, May corn was down 2 1/2 cents to US$4.17 per bushel, July corn was down 2 1/2 cents to US$4.24 and December corn was down 1 3/4 cents to US$4.45 1/2.

 

The soggy eastern U.S. corn belt is the focus of the market, with Illinois and Indiana seeing significant rain during the past 24 hours. But the market's upside momentum has slowed, as traders eye the potential for improved weather next week.

 

"The extended forecast is unreliable, but it is showing that maybe a period of drier weather could develop, allowing farmers to get into the fields and make some progress," said Shawn McCambridge, senior grains analyst for Prudential Bache.

 

He expects some profit-taking to drag on prices, but said that any downside move will be met by buyers. Traders expect consolidation in the market until next week's weather becomes more certain.

 

Farm Futures senior editor Bryce Knorr said in a market commentary that "weather remains a concern for growers, but futures are also starting to run into weaker seasonal trends into the end of the month."

 

Export sales were considered healthy. The U.S. Department of Agriculture reported total weekly export sales of 1.183 million metric tonnes Thursday, including 936,800 metric tonnes for 2008-09 and 246,000 for 2009-10.

 

The sales were up from 611,100 the previous week, and above analyst estimates of between 600,000 and 1 million metric tonnes.

 

Agronomists said that following Wednesday's heavy rains, which left some fields in the eastern corn belt under water, farmers will need a week of drying before they are able to get into the field. But more rain is expected in the short term.

 

Storm Exchange said showers and thunderstorms will again move into Illinois by midday Friday before drifting on to Indiana and Ohio and ending by Saturday evening. Another 1-2 inches of rain is possible from the system, the forecaster said.

 

In Illinois and Indiana, where farmers are already behind in corn planting, "rain from Tuesday night through Thursday morning, and Friday into Saturday will combine to prevent any significant planting progress from occurring," Storm Exchange says.

 

Next week could bring a "meaningful stretch of dryness" allowing fieldwork to take place, the forecaster says.

 

The next upside price objective is to push and close July prices above solid technical resistance at the January high of US$4.49 1/4 a bushel, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at US$4.00 a bushel.

 

First resistance for July corn is seen at US$4.30 and then at today's high of US$4.34. First support is seen at US$4.20 and then at US$4.15.