May 17, 2007

 

CBOT Corn Outlook on Thursday: Down 2-3 cents, e-CBOT theme, growing conditions

 

 

Corn futures on the Chicago Board of Trade are expected to open Thursday's day session lower, with excellent growing conditions and spillover weakness from soybeans applying pressure.

 

Analysts expect corn to open 2 to 3 cents lower.

 

In overnight electronic trading, July corn was 2 cents lower at US$3.74, and December corn was 3 1/2 cents lower at US$3.74.

 

A quiet news front will keep attention on technical factors and weather conditions, analysts said.

 

Weather conditions for newly planted crops are favorable and there is enough of a window that the remaining Midwest plantings should be completed by early next week, analysts added. Meanwhile, traders anticipate the crop conditions ratings Monday will show corn crops off to a good start.

 

Nevertheless, strong weekly export sales and lingering uncertainties over potential crop threats that may emerge over a long growing season amid a strong demand platform is expected to keep a floor under prices, a CBOT floor broker said.

 

A technical analyst said market bulls Wednesday regained some fresh upside technical momentum, with fresh speculative and fund buying interest seen again. But still, look for a trading range between the May low of US$3.54 and the May high of US$3.96 1/2 for the near term for July futures. The next downside price objective is closing prices below solid support at US$3.61 a bushel. The market would regain better upside technical momentum by pushing July futures above solid chart resistance at US$3.85.

 

First resistance for July corn is seen at Wednesday's high of US$3.77 1/2 and then at US$3.80. First support is seen at US$3.75 and then at US$3.70.

 

The U.S. Department of Agriculture reported weekly corn export sales were 1.862 million metric tonnes for the week ended May 10. Included in the total were net sales of 1.514 million metric tonnes for the 2006-07 marketing year. Analysts had forecast sales between 1,100,000 and 1,500,000 metric tonnes. The principal buyers were South Korea with 613,700 metric tonnes, and Japan with 299,400 tonnes.

 

In other demand news, Philippine feedmillers, poultry and livestock raisers will have to wait until around October this year to buy corn at zero tariff, a senior official of the National Food Authority said Thursday.

 

The DTN Meteorlogix Weather Service forecast calls for mainly dry conditions Thursday through Saturday in the western Midwest. Temperatures will average below normal Thursday, near to above normal west and below normal east Friday, and above normal Saturday. Dry conditions or with only a few light showers are seen in northern regions of the belt during Sunday. There is a chance for scattered showers to develop Monday and Tuesday. Rainfall potential with this system looks to be 0.10-0.75 inch and locally heavier.

 

In the eastern Midwest, mainly dry conditions are on tap for Thursday through Saturday. Temperatures will average below or much below normal Thursday and Friday, and near to below normal Saturday. Mainly dry conditions are seen for Sunday and Monday. Temperatures will average near to below normal Sunday, and near to above normal west and near to below normal east Monday.

 

Meanwhile, dry weather in northeast China has limited the growth of corn sprouts and the cost of production will likely increase significantly due to higher land prices, said the Jilin Province Grain Administration Thursday.

 

Insufficient rain has cut the normal growth of a large amount of corn in the western area of northeast China, and some areas haven't been planted with corn yet, said the administration in an article published on its Web site.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled lower. The benchmark September 2007 contract settled RMB4 lower at RMB1,681/tonne.