May 15, 2008

 

CBOT Corn Outlook on Thursday: Down 2-4 on weather, overnight losses

 

 

Chicago Board of Trade corn futures are expected to drop 2-4 cents on improved U.S. corn belt weather and overnight losses, traders and analysts said.

 

In overnight trading, July corn was down 2 3/4 cents to $5.93 1/2, September corn was down 3 1/4 cents to $6.05, and December corn was down 3 3/4 cents to $6.16 3/4.

 

Traders say growers are likely to make a lot of planting progress as the U.S. corn belt's soggy spring gives way to dryness and only scattered showers over the next few days.

 

The DTN Meteorlogix forecast calls for rain showers in southern and eastern parts of the corn belt between 0.10-0.75 inches Thursday, followed by mostly dry conditions through Monday. The six- to 10-day forecast calls for rainfall near or below normal in the Midwest.

 

Crude oil prices will offer support, a trader said. Light, sweet crude for June delivery recently traded $1.97, or 1.6%, higher at $126.19 per barrel.

 

"It's unbelievable," the trader said. "It's just relentless."

 

Traders and analysts said the market will continue testing technical thresholds. July corn closed overnight just above its 50-day moving average of $5.92 1/2.

 

"The lower you go, the lower you want to go," said Don Roose, president of U.S. Commodities in Des Moines, Iowa.

 

The next upside price objective is to push July corn prices above solid technical resistance at $6.13 3/4, according to a technical analyst. The next downside price objective for the bears is to push and close prices below solid support at this week's low of $5.95.

 

First resistance for July corn is seen at $6.00 and then at Wednesday's high of $6.02 1/2, the analyst said. First support is seen at $5.95 and then at $5.91 1/2.

 

The U.S. Department of Agriculture's export sales report issued Thursday morning showed net sales of 686,500 metric tonnes. 2007-08 sales totaled 547,200 metric tonnes. That's 62% above the previous week, but 14% under the prior 4-week average. Expectations ranged from 350,000 to 750,000 metric tonnes.

 

The primary buyers were Japan (215,900 metric tonnes), Mexico (115,600 metric tonnes) and Colombia (70,200 metric tonnes).

 

Traders and analysts said they are awaiting a report from Informa Economics, an analytical firm, this morning on projected total acreage which could affect the market.

 

In international news, corn imported into the European Union block is losing its competitiveness with domestic supplies, prompting the Strategie Grains analytical report to draw down corn import projections in its monthly report Thursday.

 

Strategie Grains trimmed its non-E.U. corn import forecast for 2008-09 by 1.0 million tonnes to 4.3 million tonnes.