June 13, 2008

 

CBOT Corn Outlook on Friday: Slightly higher on floods; profit-taking

 

 

Chicago Board of Trade corn futures are expected to open 1 to 3 cents higher Friday as cautious traders headed into the weekend limit further gains from the severe weather across the U.S. corn belt.

 

In overnight trading, July corn was up 1 cent to US$7.10 per bushel, September corn was up 1/2 cent to US$7.23 1/4 and December corn was up 1/2 cent to US$7.40.

 

Historic flooding in parts of the corn belt, particularly Iowa, will continue to be supportive, but prices have already risen to new all-time highs for four straight days, and traders will take profits, traders said.

 

"The seasoned traders will look at the fact that weather models show a change, and they'll take it easy going into the weekend," said Arlan Suderman, an analyst with Farm Futures.

 

The central and eastern corn belt will see more showers and thunderstorms Friday, totaling 0.25 to 1.0 inch, with locally higher amounts, according to DTN Meteorlogix. The long-range forecast "hints at drier weather in the eastern Midwest while more storms form in the west."

 

Retail investors, lured by the national coverage of corn-belt flooding, are now entering the market, Suderman said. That often signals a bull market is near the end, but Suderman said a correction will not be severe. July corn reached an intraday low of US$5.73 on May 29.

 

"This market could break a dollar and still keep this bull market intact," Suderman said.

 

Prices could be influenced by movement in crude oil and the dollar index, traders said.

 

The next upside price objective is to push and close July corn prices above technical resistance at Thursday's contract high of US$7.25 1/2, a technical analyst said. The next downside price objective is to push and close prices below solid support at US$6.75.

 

First resistance for July corn is seen at US$7.25 1/2 and then at US$7.30, the analyst said. First support is seen at US$7.00 and then at Thursday's low of US$6.96 1/2.

 

In international news, the area of land in India dedicated to cultivation of corn in the current sowing season is likely to rise 7%-to-10% from the previous year, as high prices have boosted farmers' interest, a senior industry official said.

 

European Union licenses to import corn rose 442,000 metric tonnes in the week ended June 10, adding to the surge in feed grain imports seen earlier in the 2007-08 campaign, E.U. data showed Friday.