June 15, 2006

 

CBOT Corn Outlook on Thursday: Up 1-2 cents on oversold ideas, weather

 

 

Corn futures at the Chicago Board of Trade are expected to start pit trading 1 to 2 cents higher Thursday on ideas recent losses were overdone and due for a bounce and conflicting ideas about the near term weather forecast, floor sources said.

 

In overnight e-CBOT trading, July corn gained 1 cent to US$2.38 per bushel and December rose 1 1/4 cents to US$2.63 1/2.

 

Corn is due for a bounce, a floor analyst said. The market is oversold and the weather forecasts this morning have changed somewhat in the 6-to-10 day outlooks as compared to Wednesday, he added. The relative strength index in July corn stands at 33.87, indicating oversold conditions, he added.

 

In the western U.S. Midwest, scattered showers and thunderstorms are expected through western and northern locations of the region Thursday and Friday with drier weather on Saturday, DTN Meteorologix Weather said. Amounts should average .30-1.00 inch and locally heavier. Scattered to widely scattered thunderstorms are forecast for the southern and eastern areas of the region late Friday and into Saturday, with amounts of .10-.50 inch and locally heavier.

 

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

 

In the eastern U.S. Midwest, mainly dry conditions are forecast over the next several days with a chance for a few thundershowers in the west on Saturday. Temperatures will average above normal, DTN Meteorologix Weather said. On Sunday, there is a chance for widely scattered showers and thundershowers, amounts between .10-.50 inch and locally heavier with mainly dry conditions on Monday.

 

In the 6-to-10 day outlook, temperatures are forecast to average near to above normal and rainfall near to below normal, DTN Meteorologix Weather said.

 

Export sales were well above expectations and the market could see some strength from it, a commission house analyst said.

 

The U.S. Department of Agriculture reported weekly corn export sales were 1.465 million metric tonnes for the 2005-06 crop year, well above the 800,000-to-1.050 million tonnes forecast by analysts. Japan was the largest buyer at 565,900 metric tonnes.

 

On technical charts, serious near term chart damage occurred with Wednesday's downside price action, a technical analyst said. The next downside price objective in July is closing below chart support at the May low of US$2.35 1/2, he added. First resistance for July corn is pegged at US$2.40 1/4 and then at US$2.42. First support is seen at US$2.36 3/4, Wednesday's low and then at US$2.35 1/2.

 

In other corn news, the Korean Feed Association, or KFA purchased three 55,000 metric tonne cargoes of U.S. origin corn from Cargill and Bunge, an association official said Thursday.

 

Corn futures on China's Dalian Commodities Exchange ended slightly higher with the March contract up RMB3 to RMB1,475/tonne.