June 19, 2007

 

CBOT Corn Outlook on Tuesday: Down 7-9 cents on rain, e-CBOT weakness

 

 

Chicago Board of Trade corn futures are expected to start trading 7 to 9 cents lower Tuesday, dragged down by rain in parts of the eastern U.S. Midwest Monday night as well as losses set in overnight activity, analysts said.

 

In overnight electronic trading, July corn dropped 9 1/4 cents to US$4.06 3/4 per bushel, September fell 9 1/2 cents to US$4.14 1/2 and December declined 7 1/2 cents US$4.16. E-CBOT volume in December was 10,804 contracts.

 

The rain received in the eastern U.S. Corn Belt outweighed the decline in crop conditions and the forecast is for additional moisture for later in the week, which may encourage some profit taking, a commission house analyst said.

 

The U.S. Department of Agriculture reported that corn conditions declined by 7 percentage points in the good-to-excellent category, above the 2 to 4 percentage point decline expected by analysts.

 

Several eastern U.S. Midwestern states reported sharp deterioration in conditions including Illinois, which fell by 21 percentage points in the good-to-excellent category, Ohio, which dropped 13 percentage points and Indiana, which also dropped 13 points in the good-to-excellent category.

 

It's a weather market, and the weather turned wet, a trader said. Corn should open to the downside, but there remains a lot of the growing season ahead, the trader added.

 

In the western U.S. Midwest, mainly dry weather is expected Wednesday, with scattered showers and thundershowers redeveloping in northern and central locations Wednesday night or Thursday, DTN Meteorologix Weather said. Amounts are expected to be 0.25- to-1.00 and locally heavier. Temperatures are expected to average above normal Wednesday and Thursday.

 

In the eastern U.S. Midwest, mainly dry weather is forecast for Wednesday and most of Thursday with a chance for thundershowers developing in northwest sections overnight and Friday. Amounts expected are 0.25-0.75 and locally heavier. Temperatures are forecast near-to-above normal Wednesday and above normal Thursday, Meteorologix Weather said.

 

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

 

On daily technical charts July corn closed near the session low despite reaching a fresh three-week high in the session, a technical analyst said. The bulls continue to have upside momentum and there are still forecasts for a high-pressure ridge to build over the U.S. Midwest in July which limited selling interest Monday. The bulls' next upside price objective remains closing prices above Monday's high of US$4.26 per bushel with the bears' next downside objective closing prices below solid support at US$4.00 per bushel.

 

First resistance for July corn is seen at US$4.20 and then at US$4.26. First support is seen at Monday's low of US$4.14 1/2 and then at US$4.10.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the benchmark September contract down RMB20 at RMB1,594 per metric tonne.