June 6, 2008

 

CBOT Corn Outlook on Friday: Higher on crop concerns, outside markets

 

 

Chicago Board of Trade corn futures are expected to open 3 to 5 cents higher Friday on the momentum from Thursday's new highs and on support from crop concerns and outside markets, analysts said.

 

In overnight trading, July corn was up 2 3/4 cents to US$6.46 per bushel, September corn was up 2 1/2 cents to US$6.58 1/2 and December was up 2 1/4 cents to US$6.73.

 

July corn is at an all-time high, and prices have broken out of a trading range that had confined the market for two months. July had been trading between US$5.80 and US$6.20. An analyst said the new highs will encourage more buying.

 

"With the weekend approaching, we could see a little profit-taking today, but all I think we'll do is temper gains," the analyst said.

 

Traders said weather has become the key factor in the market, as recent heavy rain across much of the corn belt is causing farmers to replant and hindering emergence.

 

The DTN Meteorlogix forecast calls for more rain in the western and northern corn belt, totaling 0.10 to 1 inch, with locally heavier amounts. The western and northern corn belt will see daily threats of showers and thunderstorms through Tuesday, according to the forecast. Areas east and south will be drier, and temperatures across the corn belt will be above average.

 

Analysts say the late planting and continued bad weather will likely lead to reduced planted acreage and yields. The U.S. Department of Agriculture will issue a supply and demand report on Tuesday.

 

Steve Meyer of Paragon Economics, in a grain market outlook session at Pork Expo in Des Moines, Iowa, projected the acres planted to corn will be 82 million to 83 million, reflecting the largest decline in actual corn acres versus planned since 1993 - the year of the great Midwest flood. In March the USDA estimated planting intentions at 86 million.

 

Meyer predicted the corn crop to be about a billion bushels less than USDA's latest projection made in May of 12.125 billion.

 

Traders said significant fund money re-entered the market Thursday, largely due to a crude oil rally and a weaker dollar that stoked inflationary fears.

 

The next upside price objective is to push and close July prices above solid technical resistance at US$6.50, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid support at US$6.15.

 

First resistance for July corn is seen at Thursday's contract high of US$6.43 1/2 and then at US$6.50, the analyst said. First support is seen at US$6.40 and then at US$6.35.