June 12, 2007

 

CBOT Corn Outlook on Tuesday: Down 2-3 cents; overbought, weak overnight trade

 

 

Chicago Board of Trade corn futures are predicted to begin day time trading 2-to-3 cents lower Tuesday, following the tone established in overnight trading as well as on ideas recent gains were overdone, analysts said.

 

In overnight electronic trading, July corn fell 2 3/4 cents to US$3.93 1/4 per bushel, September declined 4 cents to US$4.01 and December lost 3 1/2 cents to US$4.02 1/2. e-CBOT volume in July was 6,457 contracts.

 

Corn should open weaker on the lower prices overnight and ideas recent gains were overdone, an analyst said. In addition Monday's crop progress report showed corn conditions were better than most analysts expected which should add to the weaker tone he said.

 

The U.S. Department of Agriculture reported that 77% of the U.S. corn crop was in good-to-excellent condition, down one percentage point from the previous week and within the 1-to-3 percentage point decline expected.

 

Ninety-nine percent of the crop has emerged versus the five-year average of 95%.

 

In Iowa, 77% of the crop was rated in good-to-excellent condition, down 2 percentage points. In Illinois, the crop conditions in the good-to-excellent category also declined 2 percentage points to 77%.

 

Trading could be choppy and two-sided, a trader said. There is a lot of uncertainty about the weather which will keep the market nervous, the trader said. People will be watching the midday weather updates for direction, he added.

 

In the western U.S. Midwest, thunderstorms on Tuesday will be limited to the Dakotas and Nebraska with the rain moving eastward Wednesday and Thursday to include northwest Iowa and parts of Minnesota, DTN Meteorologix Weather said. The rest of the region will be mainly dry in the period. Temperatures are expected to average above normal.

 

In the eastern U.S. Midwest, mainly dry weather is expected through Thursday, Meteorologix Weather said. Temperatures are predicted to average above normal in the period

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-below normal with rainfall averaging near-to-below normal.

 

On daily technical charts July corn gapped open higher and hit a fresh 2 1/2 month higher, establishing an upside "breakout" from the recent sideways pattern on the daily bar chart, a technical analyst said. The bulls' next upside price objective is closing prices above major psychological resistance at US$4.00. The next downside price objective for the bears is closing prices below solid support at US$3.86 1/2 per bushel, which would fill on the downside Monday's big upside price gap on the daily bar chart, the analyst said. First resistance is seen at Monday's high of US$4.00 1/2 and then at US$4.05. First support is pegged at Monday's low of US$3.90 3/4 and then at US$3.86 1/2.

 

In other corn news, China exported 30,000 metric tonnes of corn in May, according to preliminary data from the country's General Administration of Customs Tuesday. In the first five months of 2007, the country exported 3.51 million metric tonnes of corn, up 55.2% from the previous year.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark September contract down RMB/10 at RMB1,636 per metric tonne.