June 7, 2007

 

CBOT Corn Outlook on Thursday: 1-2 cents lower on follow through, weak exports

 

 

Chicago Board of Trade corn futures are expected to start daytime trading 1 to 2 cents lower Thursday as follow through weakness from Wednesday and in the overnight session and poor export sales are expected to weigh on prices at the beginning of day session trading, analysts said.

 

In overnight electronic trading, July corn slipped 1 1/4 cents to US$3.73 1/2 per bushel, September fell 1 cent to US$3.80 1/2 and December declined 3/4 cent to US$3.80 1/2. E-CBOT volume in July was 5,799 contracts.

 

Corn should begin trading a little easier on follow through selling from the overnight session and Wednesday's price weakness, an analyst said. Weekly export sales were poor and the near-term weather remains favorable with little change in the longer term forecasts, he added.

 

The U.S. Department of Agriculture reported weekly corn export sales for the period ending May 31 totaled 569,200 metric tonnes below the range of analysts' estimates. Included in the total were sales of 193,400 metric tonnes for delivery in the 2007-08 marketing year.

 

The USDA is scheduled to release its latest supply and demand estimates Monday but the market is expecting it to have little impact as analysts don't expect much change from the previous report, a floor trader said.

 

An average of 18 analysts surveyed by Dow Jones expects 2006-07 corn ending stocks at 947 million bushels, 10 million bushels above the USDA's 937 million bushel estimate in May. The average ending stocks estimate for the 2007-08 crop year was 997 million bushels, 50 million bushels above the 947 million estimated in May.

 

In the western U.S. Midwest, mainly dry weather is forecast for Friday and Saturday, DTN Meteorologix Weather said. Temperatures are expected to be much cooler Friday before warming up again Saturday. On Sunday, there is a chance for a few thundershowers in southern areas.

 

In the eastern U.S. Midwest, a few thundershowers are possible Thursday night into Friday morning, before dry weather returns on Saturday, Meteorologix Weather said. Amounts expected are 0.10-0.50 inch and locally heavier. Temperatures are forecast to average much above normal Thursday, turning cooler Friday and then warmer again on Saturday.

 

In the 6- to 10-day outlook, temperatures are expected to average near- to above-normal with rainfall expected to average near- to above-normal west and near- to below-normal east, Meteorologix Weather said.

 

On daily technical charts July closed lower on additional profit-taking and is back in the middle of the recent trading range of the past few weeks, a technical analyst said. The bulls' next upside price objective is closing prices above Wednesday's high of US$3.82 1/2 per bushel, with the next downside objective for the bears is closing prices below support at US$3.70 per bushel.

 

First resistance is seen at US$3.78 and then at US$3.80. First support is seen at US$3.71 1/2 and then at US$3.70.

 

In other corn news, Chinese farmers are shifting more acreage to corn as demand from industrial users increases, analysts said. This year, the country is expected to increase corn acreage by 2.5%.

 

Corn futures on China's Dalian Commodities Exchange settled mostly lower with the benchmark September contract down RMB/3 at RMB1,663 per metric tonne.