June 15, 2007

 

CBOT Corn Outlook on Friday: Called 1-4 cents higher on e-CBOT, weather

 

 

Chicago Board of Trade corn futures are expected to start trading 1 to 4 cents higher Friday as stronger prices in overnight trade and continued supportive weather forecasts are expected to underpin prices at the opening of day session trading, analysts said.

 

In overnight electronic trading, July corn gained 5 1/2 cents to US$4.15 per bushel, September rose 2 cents to US$4.19 1/2 and December ended up 3/4 cent at US$4.18 1/4. E-CBOT volume in July was 7,153 contracts.

 

Corn could start out higher based on the overnight gains in nearby July and the continued near-term dry weather forecasts for the eastern U.S. Midwest, a commission house analyst said. However, the two major weather models disagree about the potential for rain in longer-term outlooks, which could act as a brake to upside momentum, the analyst said.

 

The market has seen good gains this week and is vulnerable to profit taking ahead of the weekend, a floor trader said. Given the uncertainty surrounding the weather it is hard to be either long or short going into the weekend.

 

"People will want to go home as flat as possible," the trader said.

 

Corn will be watching wheat futures, a floor analyst said. Wheat futures have soared this week, and a swing higher or lower in wheat could influence prices, he said.

 

CBOT July wheat has rallied almost 80 cents.

 

The two major weather models aren't in very good agreement for late next week with one model suggesting the potential for more rain and the other model predicting hot and dry weather, DTN Meteorologix Weather said

 

In the near-term outlook the western U.S. Midwest is expected to have mostly dry weather for Saturday and Sunday, with a chance for scattered showers and thundershowers in the Monday through Wednesday period, Meteorologix Weather said. Temperatures during the weekend are expected to average above normal with highs in the 80s to 90s degrees Fahrenheit.

 

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

 

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

 

On daily technical charts July corn closed near the session high Thursday on fund buying and support weather forecasts, a technical analyst said. The bulls have technical momentum but once prices pushed above a major psychological resistance at US$4 per bushel, larger upside and downside price swings can occur, the analyst said. The bulls' next upside price objective remains closing prices above solid technical resistance at US$4.15 per bushel with the bears next downside objective is closing prices below solid support at US$3.90 per bushel.

 

First resistance is for July corn is seen at US$4.13 1/2 Thursday's high and then at US$4.15. First support is seen at US$4.03 and then at US$4.00.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled modestly higher with the benchmark September contract up RMB7 at RMB1,626 per metric tonne.

 

Friday afternoon the Commodity Futures Trading Commission is scheduled to release the commitment of traders report for the period ending June 12.