June 1, 2007

 

CBOT Corn Outlook on Friday: Down 3-5 cents on forecasts, profit taking

 

 

Chicago Board of Trade corn futures are predicted to begin 3 to 5 cents lower Friday, undermined by overnight weather forecasts and profit taking after the sharp rally seen this week, analysts said.

 

In overnight electronic trading, July corn fell 4 1/4 cents to US$3.86 per bushel, September declined 4 3/4 cents to US$3.86 3/4 and December also fell 4 3/4 cents to US$3.80. E-CBOT volume in July was 7,900 contracts.

 

The latest weather forecasts for next week are showing a more seasonal pattern that is favorable for crop development and that should weigh on the market, an analyst said. Overnight prices reflect the forecast and corn should begin on the defensive, the analyst added.

 

July corn has rallied more than 20 cents since Tuesday, and there could be some position squaring ahead of the weekend as some position holders take some profits, a floor trader said. In addition beyond the export sales report which was in line with expectations, there is no fresh news out to support the market, the floor trader said.

 

The U.S. Department of Agriculture reported that weekly export sales for the period ending May 24 were 1.366 million metric tons, within the 700,000-1.4 million tons expected. Included in the total were sales of 689,500 tons for delivery in the 2007-08 marketing year.

 

In the western U.S. Midwest, showers and light rain favoring the northern areas are possible on Saturday before drier weather returns on Sunday, DTN Meteorologix Weather said. There is a chance for a few light showers or sprinkles returning to the region on Monday. Temperatures are expected to average near-to-below normal for the weekend and Monday.

 

In the eastern U.S. Midwest, scattered sprinkles or light showers are possible this weekend with amounts of 0.10-0.50 inch and locally heavier, Meteorologix Weather said. Dry weather or only are few light showers favoring the east are possible Monday. Temperatures are expected to average near-to below-normal west and above-normal east Sunday and near- to below-normal Monday.

 

In the 6- to 10-day outlook, temperatures are expected to average near- to below-normal west and near- to above-normal east. Rainfall is expected to average near- to above-normal west and north and near- to below-normal southeast.

 

On daily technical charts July gapped open higher and hit another fresh three-week high, a technical analyst said. Although prices traded to the upper boundary of the two-month old trading range, they could not move above it and backed off the session high by the close. The bulls' next upside price objective remains closing prices above US$3.96 1/2, with the next downside price objective for the bears is closing prices below US$3.75 per bushel.

 

First resistance for July is seen at US$3.95 1/2, Thursday's high and then at US$3.96 1/2. First support is seen at US$3.84 1/2, and then at US$3.80.

 

In other corn news, the Seoul branch of the Korea Feed Association bought 110,000 metric tonnes of corn in a tender concluded Thursday, an association official said Friday.

 

Corn futures on China's Dalian Commodities Exchange settled mostly higher with the benchmark September contract up RMB1 at RMB1,663 per metric tonne.