May 22, 2007

 

CBOT Corn Outlook on Tuesday: Down 3-5 cents on crop progress, weak e-CBOT

 

 

Chicago Board of Trade corn futures are expected to begin day session trading 3-to-5 cents lower Tuesday following a better-than-expected crop progress report Monday afternoon and lower prices in overnight trading, analysts said.

 

In overnight electronic trading, July corn declined 4 cents to US$3.77 per bushel, September fell 5 1/4 cents to US$3.76 and December fell 5 1/2 cents to US$3.74 3/4. e-CBOT volume in July was 8,202 contracts.

 

The crop progress report was better than expected. It negatively influenced price direction overnight and should press prices on the opening, a commission house analyst said.

 

The U.S. Department of Agriculture reported that 78% of the U.S. corn crop was rated in good-to-excellent condition, well above trade estimates of 62%-to-65% as well as last year's 66%.

 

In Illinois, 76% of the crop was rated in good-to-excellent condition, while in Iowa 79% was rated good-to-excellent.

 

Ninety-two percent of the crop was planted as of May 20, slightly above analyst expectations and above the five-year average of 86%.

 

In addition, 67% of the crop has emerged compared to the five-year average of 56%.

 

The corn market could see some profit-taking after recent price strength, however, the weather remains the feature, a trader said. Market direction after the opening will depend on what the speculative interests want to do and the mid-day weather forecasts, he added.

 

In the western U.S. Midwest showers and thundershowers are forecast Wednesday and Thursday with rainfall potential of 0.30-1.50 inches and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to turn cooler in the period after averaging above normal Tuesday.

 

In the eastern U.S. Midwest, mainly dry weather is expected Wednesday and Thursday with the exception of Illinois and Wisconsin, which could see showers with amounts of 0.10-0.50 inch on Thursday, Meteorologix Weather said. Temperatures are expected to average above normal with highs mostly in the 80s Fahrenheit.

 

In the 6-to-10day outlook, temperatures are expected to average near-to-below normal in the north U.S. Midwest and near-to-above normal in the south. Rainfall is expected to average near-to-above normal in the west and near-to-below normal in the east, Meteorologix Weather said.

 

On daily technical charts, July closed higher Monday on short-covering and fund buying and hit a fresh three-week high, a technical analyst said. Bulls are regaining technical momentum but prices should remain in a trading range between US$3.54 and US$3.96 1/2, July's low and high in May. The next upside price objective for bulls is pushing prices above solid chart resistance at US$3.85, while the next downside price objective for bears is closing prices below solid support at US$3.70 per bushel.

 

First resistance for July is seen at US$3.82 1/2, Monday's high and then at US$3.85. First support is seen at US$3.75 and then at US$3.73 1/2.

 

In other corn news, the USDA reported that Guatemala bought 190,001 metric tonnes of U.S. corn for delivery in 2007-08.

 

Corn futures on China's Dalian Commodities Exchange settled mostly lower with the exception of the heavily traded January contract, which settled up RMB2 at RMB1,733 per metric tonne.