June 18, 2008

 

CBOT Corn Outlook on Wednesday: Up 2-4 cents on flooding, technical momentum

 

 

Chicago Board of Trade corn futures are expected to open 2-4 cents higher Wednesday on continued support from flooding across the U.S. Midwest and technical momentum, traders said.

 

In overnight trading, July corn was up 3 1/2 cents at US$7.45 3/4 a bushel, September corn was up 3 1/2 cents at US$7.60 and December corn was up 3 1/2 cents at US$7.79 1/2.

 

With so much uncertainty about flooding and its effect on the crop, many are reluctant to sell, traders said, even though weather has become bearish. The U.S. corn belt is experiencing mostly dry weather this week, and temperatures are also expected to climb by the weekend.

 

"All these things that are supposed to bring the crop around haven't made much of an impact," said Jerry Gidel, a grain analyst at North American Risk Management Services. "There's a lot of technical momentum, but I'm surprised we didn't have more of a respite than we had."

 

The trade will continue to monitor flooding along the Mississippi River, a trader said, listening for news of levee breaks, which would support further gains.

 

"That will drown out more cropland, and it's not going to be replanted to corn," the trader said. "That just exacerbates the situation."

 

Strong fundamentals will limit any correction, analysts said. December corn would find "tremendous" technical support around US$7.20, Gidel said.

 

Corn hit a record high of US$7.60 in the July contract in early trading Monday, and December hit a contract high of US$7.91 1/2.

 

The DTN Meteorlogix forecast calls for scattered to widely scattered showers and thunderstorms of 0.25 to 1 inches Thursday, with locally heavier amounts. Scattered showers and thunderstorms are also expected to develop Sunday. Temperatures will be near to below normal.

 

The bulls' next upside price objective is to push and close prices above technical resistance at the contract high, a technical analyst said. The next downside price objective for the bears is to push and close prices below psychological support at US$7.