June 8, 2007

 

CBOT Corn Outlook on Friday: Down 3-4 cents on profit taking, commodity weakness

 

 

Chicago Board of Trade corn futures are predicted to begin day session activity 3 to 4 cents lower Friday, as profit taking on ideas Thursday's gains were overdone and weaker commodity prices across the board overnight and this morning, analysts said.

 

In overnight electronic trading, July corn declined 3 3/4 cents to US$3.81 per bushel, September fell 4 1/2 cents to US$3.89 and December dropped 3 3/4 cents to US$3.89 3/4. E-CBOT volume in July was 8,892 contracts.

 

The market is expected to open on the defensive, a commission house analyst said. Corn was lower overnight on ideas recent gains were overdone and due for a correction which should limit buying enthusiasm, the analyst said.

 

Commodities in general sold off overnight and the weakness continues in gold, silver, crude oil and bonds Friday morning, a trader said.

 

In addition, the dollar is sharply higher and that is negative for commodities, and the weather forecast is predicting more seasonal temperatures and the prospects of additional rain, he added.

 

Any price weakness could be limited however, ahead of Monday's U.S. Department of Agriculture supply and demand reports, an analyst said.

 

2006-07 corn ending stocks are estimated at 947 million bushels, 10 million bushels above the USDA's 937 million bushel estimate in May, according to a survey of 18 analysts by Dow Jones. 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, there is a chance for scattered showers with amounts of 0.10-0.50 inch and locally heavier on Sunday. Scattered showers and thunderstorms are possible Monday, DTN Meteorologix Weather said. Temperatures are expected to average above-normal Sunday and near- to above-normal Monday.

 

In the eastern U.S. Midwest, mainly dry weather is expected over the weekend with showers possible Monday in far western sections of the region, Meteorologix Weather said. Temperatures are forecast to average near- to above-normal west and near- to below-normal east on Sunday and near- to above-normal Monday.

 

In the 6- to 10-day outlook, temperatures are expected to average near normal with rainfall also expected to average near normal, Meteorologix Weather said.

 

On daily technical charts July closed higher on fresh fund buying, but prices are still in a well defined trading range, a market technician said. A rally Friday could result in an "upside" breakout from the trading range, he added. The bulls' next upside price objective is closing prices above the May high of US$3.96 1/2 per bushel, with the next downside objective for the bears is closing prices below solid support at this week's low of US$3.71 1/2 per bushel.

 

First resistance is seen at US$3.86 1/4 and then at US$3.90. First support is seen at US$3.80 and then at US$3.75.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the benchmark September contract down RMB7 at RMB1,656 per metric tonne.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders report for the period ending June 5.