June 9, 2008

 

CBOT Corn Outlook on Monday: Seen sharply higher on heavy rains

 

 

Chicago Board of Trade corn futures are seen opening sharply higher Monday following heavy rains across the Midwest that threaten crop production, traders said.

 

In overnight trading, July corn was up 16 3/4 cents to US$6.67 1/2 per bushel, September corn was up 15 3/4 cents to US$6.79 1/2 and December corn was up 16 1/4 cents to US$6.94.

 

Weather has become the focus of the market, traders said. Areas throughout the Midwest, including Iowa, Wisconsin and southern Indiana saw several inches of rain over the weekend.

 

"It's just too much water, you're going to have to replant" a trader said.

 

Traders are expecting crop condition ratings to drop in the U.S. Department of Agriculture's crop progress report released this afternoon. They also say the number of planted acres could drop by 4 million to 5 million acres, from the USDA projection of 86.5 million. The USDA will release its supply and demand report Tuesday.

 

Mike Palmerino, a meteorologist with DTN Meteorlogix, said it was "excessively wet" over the weekend from central Nebraska all the way into Indiana. Widespread areas of Iowa saw more than three inches of rain, and Terre Haute, Ind., saw 6.25 inches, Palmerino said.

 

"I'm sure you're getting flash flooding of rivers and streams, and standing water in the fields," Palmerino said.

 

He said warmer weather in parts of the eastern corn belt, particularly the Ohio Valley, was good for crop growth, but that elsewhere the heat "was certainly not a factor, if you're looking at flooded fields."

 

Traders said corn will also be supported by momentum from Friday, when prices rallied on the weather and outside markets. July corn set an all-time high in overnight trading at US$6.73.

 

The next upside price objective is to push and close July prices above solid technical resistance at Friday's contract high of US$6.63 1/4. The next downside price objective for the bears is to push and close prices below solid support at US$6.25.

 

First resistance for July corn is seen at Friday's contract high of US$6.63 1/4 and then at US$6.75. First support is seen at Friday's low of US$6.41 3/4 and then at US$6.39.

 

The USDA will release export inspections at 11 a.m. EDT. The crop progress report will be released at 4 p.m. EDT.