June 13, 2007

 

CBOT Corn Outlook on Wednesday: 3-4 cents lower on weather outlook, weak e-CBOT

 

 

Chicago Board of Trade corn futures are expected to start trading 3 to 4 cents lower Wednesday as some overnight forecasts increased the potential for rain next week and spillover from lower prices in overnight activity, analysts said.

 

In overnight electronic trading, July corn declined 4 cents to US$3.89 1/2 per bushel, September fell 4 1/2 cents to US$3.98 and December lost 4 1/4 cents to US$4.01 1/4. E-CBOT volume in July was 5,503 contracts.

 

Forecasts calling for the potential for rain in the eastern U.S. Midwest next week are bearish and should keep the market on the defensive, a floor trader said.

 

Weaker prices overnight and profit taking could also influence prices to the downside, but weakness should be limited as the market will wait on the midday weather updates to confirm the previous forecasts, an analyst said.

 

Near-term weather forecasts remain hot and dry in much of the U.S. Midwest but disagree in the 6- to 10-day forecast, DTN Meteorologix Weather said. One model has the eastern U.S. Midwest remaining mostly dry while the other predicts cooler temperatures and rain for the eastern part of the region.

 

In the near-term outlook, the western U.S. Midwest is expected to have scattered showers and thundershowers are forecast Wednesday and Thursday with rainfall potential 0.30-1.50 inches and locally heavier in South Dakota, Nebraska, and western and northern Minnesota with dry weather expected across the region Friday, DTN Meteorologix Weather said. Temperatures are expected to average above normal through Thursday and Friday.

 

In the eastern U.S. Midwest, mainly dry weather is expected through Friday with temperatures are expected to average above normal with highs mostly in the upper 80's to low 90 degrees Fahrenheit.

 

In the 6- to 10-day outlook, temperatures are expected to average near to above normal. Rainfall is expected to average near-to-below normal, Meteorologix Weather said.

 

On daily technical charts July corn closed near mid-range but well above the low Tuesday, a market technician said. However, the bulls still have the upside technical momentum, he said. The bulls next upside price objective is closing prices above major psychological resistance at US$4.00, while the bears next downside price objective is closing prices below solid support at US$3.86 1/2 per bushel, which would fill on the downside the upside price gap, the technician said.

 

First resistance is seen at Tuesday's high of US$3.97 and then at this week's high of US$4.00 1/2. First support is seen at US$3.90 and then at Tuesday's low of US$3.87 1/2.

 

In other corn news, corn prices in China were steady at high levels in the week ended Wednesday, supported by a slight pick up in demand, analysts said.

 

Corn production in India could increase 9% to around 15 million metric tonnes in the crop year beginning in October due to high prices and a resulting increase in planted area an industry official said Wednesday.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark September contract down RMB11 at RMB1,625 per metric tonne.