June 5, 2008

 

CBOT Corn Outlook on Thursday: 3-5 cents higher on crop concerns

 

 

Chicago Board of Trade corn futures are expected to open 3 to 5 cents higher Thursday as concerns about planted acreage and yields push prices to the upper edge of a two-month trading range, traders said.

 

In overnight trading, July corn was up 5 3/4 cents to US$6.20 1/4 per bushel, September corn was up 5 3/4 cents to US$6.33 1/2 and December corn was up 5 1/2 cents to US$6.48 1/2.

 

Heavy rains across much of the U.S. corn belt have further hindered a crop that was already planted late, traders said. The rains have prevented some growers from finishing planting while causing others to have to either replant or switch to soybeans.

 

"The majority of the stuff seems to have gotten in fine," said John Kleist, a broker/analyst with Allendale in McHenry, Ill. "But a minority has not, and that's what the market is addressing now."

 

Analysts say planted acreage could drop by 4 million to 5 million acres. Yields are also likely to suffer, they say, due to late emergence and replanting of new seeds with shorter seasons.

 

The DTN Meteorlogix forecast calls for continued showers and thunderstorms in northern and western parts of the corn belt Thursday and Friday, totaling up to an inch both days, with locally heavier amounts possible.

 

Kleist said prices have the potential to break out of a recent trading range which for July corn is between US$5.80 and US$6.20. Prices could then test contract highs, analysts said.

 

Weaker crude oil and a stronger dollar could limit gains, traders said.

 

The U.S. Department of Agriculture announced export sales of 702,400 metric tonnes for the week ended May 29, compared to 703,400 metric tonnes the prior week. Analysts projected sales between 400,000 and 850,000 metric tonnes.

 

The next upside price objective is to push and close prices above solid technical resistance at this week's high of US$6.18 3/4, a technical analyst said. The next downside price objective is to push and close prices below solid support at US$6.00.

 

First resistance for July corn is seen at US$6.18 3/4 and then at US$6.25, the analyst said. First support is seen at US$6.07 and then at Wednesday's low of US$6.02 1/4.

 

In international news, the China National Grain and Oils Information Center Thursday raised its corn output estimate for this year to 154 million metric tonnes, up from 149 million tonnes it expected last month, on an expansion in acreage.