May 27, 2008

 

CBOT Corn Outlook on Tuesday: Higher on overnight, weekend weather

 

 

Chicago Board of Trade corn futures are expected to open 2 to 3 cents higher on overnight gains and stormy weekend weather that may impact planting and crop development, a trader said.

 

In overnight trading, July was up 2 1/4 cents to US$6.02 per bushel, September was up 1 3/4 cents to US$6.14 1/2 and December was up 2 cents to US$6.29 1/4.

 

Heavy rains in parts of the U.S. corn belt over the weekend could require some flooded fields to be replanted, a trader and an analyst said.

 

DTN Meteorlogix said Illinois, Iowa and Missouri saw between 0.50 inches and 2 inches of rain over the weekend, with locally heavier amounts in some areas. The southern half of the Midwest will see more showers and thunderstorms today, totaling between 0.25 and 1.50 inches, with locally heavier amounts in some areas.

 

"I anticipate that the hardest hit areas are also the areas that haven't finished planting yet," an analyst said. Missouri in particular continues to be hard-hit, he said.

 

He added that cold weather in parts of the Midwest could hinder emergence for corn that has already been planted.

 

This afternoon's crop progress report from the U.S. Department of Agriculture is expected to show planting progress between 80% and 90% compete, according to traders and analysts. Analysts say that planting the crop after mid-May typically causes yields to decline.

 

Outside markets, in particular crude oil, will continue to play an important role in corn as they did last week, an analyst said.

 

The next upside price objective is to push prices above solid technical resistance at last week's high of US$6.11 1/4, according to a technical analyst. The next downside price objective is to push and close prices below solid support at US$5.79 1/4.

 

First resistance for July corn is seen at Friday's high of US$6.02 and then at US$6.07, the analyst said. First support is seen at US$5.95 and then at Friday's low of US$5.93.

 

The Commodity Futures Trading Commission reported Friday that speculative funds cut 8,239 short CBOT corn contracts and cut their long positions by 3,142 contracts, putting them net long 185,388 contracts as of May 20. The supplemental commitment of traders report showed index funds cut 15,740 contracts from their long positions and added 591 contracts to their short positions and are now net long 429,821 contracts.

 

Commercial funds cut 16,332 contracts from their short positions and cut 289 contracts from their long positions and are now net short 508,133 contracts, the CFTC said.

 

In International news, Mexico President Felipe Calderon said the country is eliminating tariffs on wheat, corn and rice as part of a plan to counter rising food prices that have provoked street protests.

 

Also, Turkey's state grain board, the TMO, bought 140,000 metric tonnes of corn in a tender, the Ihlas News Agency, or IHA, reported Monday, citing a TMO official. The origins of the corn were Canada, Ukraine and Argentina.