May 23, 2007

 

CBOT Corn Outlook on Wednesday: Up 2-4 cents on oversold ideas, weather concerns

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 2-to-4 cents higher Wednesday on ideas recent declines were overdone and concerns about dry weather conditions in the eastern U.S. Midwest, analysts said.

 

In overnight electronic trading, July corn gained 4 1/2 cents to US$3.74 per bushel, September rose 3 3/4 cents to US$3.75 and December also gained 4 1/2 cents to US$3.73 3/4. e-CBOT volume in December was 4,804 contracts.

 

The weather remains the feature, a commission house analyst said. While the western U.S. Corn Belt continues to receive rain, the eastern corn belt remains dry and could use some moisture, the analyst said. The market is waiting to see if some of the rain in the western belt moves into the east over the next several days, he added.

 

Corn was overdone to the downside Tuesday given the weather concerns and should rebound Wednesday a floor trader said. It's still early in the growing season, but given the need to produce a large corn crop this year, the market is focused on the weather, he said.

 

In the western U.S. Midwest rain and thundershowers are expected through Thursday before drier weather returns on Friday, DTN Meteorologix Weather said. Rainfall potential is 0.50-1.50 inches and locally heavier. Temperatures are expected to turn cooler during this period, Meteorologix Weather said.

 

In the eastern U.S. Midwest, there is a chance for a few light showers in parts of Illinois Thursday and a chance for additional scattered rain and possible thundershowers on Friday. Rainfall should average 0.10-0.50 inch and locally heavier in Illinois and Wisconsin and a trace-0.35 inch elsewhere in the region. Temperatures are expected to average above normal Thursday, below normal west and above normal east on Friday, Meteorologix Weather said.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-below normal, while rainfall should average near-to-above normal west and near-to-below normal east.

 

On daily technical charts, July closed lower and nearer the session low Tuesday as trading has turned choppy, a technical analyst said. The next upside price objective for bulls is pushing prices above chart resistance at this week's high of US$3.82 1/4, while the next downside price objective for bears is closing prices below support at US$3.61 per bushel.

 

First resistance for July is seen at US$3.75, and then at US$3.82 1/4. First support is seen at Tuesday's low of US$3.68 and then at US$3.65.

 

In other corn news, the Korea Corn Processing Association, or Kocopia, bought 110,000 metric tonnes of optional origin corn from Bunge in a tender concluded Wednesday, an association official said.

 

The Philippines plans to raise corn acreage by 600,000 hectares over three years in an effort to attain self-sufficiency in corn production, the country's agricultural secretary said Wednesday.

 

Cash corn prices in China were higher in the week ended Wednesday on tight supplies and drier weather analysts said. However, prices are not expected to surge due to the slow recovery of the feed meal sector and the use of wheat as a substitute for feed meal, the analysts said.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark September contract down RMB5 at RMB1,673 per metric tonne.