June 21, 2007

 

CBOT Corn Outlook on Thursday: Seen 1-2 cents higher on mixed forecasts, e-CBOT

 

 

Chicago Board of Trade corn futures are expected to start day time trading 1-to-2 cents higher Thursday following light gains set in the overnight session and concerns that rain predicted over the next several days may not reach some dry areas of the eastern U.S. Midwest, analysts said.

 

In overnight electronic trading, July corn gained 1 cent to US$3.95 1/4 per bushel, September slipped 1/2 cent to US$4.03 3/4 and December rose 3/4 cent to US$4.07. e-CBOT volume in December was 9,358 contracts.

 

"It's all about the weather forecasts, an analyst said. "I can give you a bullish weather forecast or a bearish weather forecast," he said. Rain is expected in parts of Illinois Thursday with additional rain Friday and Saturday. The question is how much of the dry areas of Illinois, Indiana and Ohio receive moisture and the amounts, he added.

 

In addition, some longer term forecasts expect hot weather to move into the U.S. Midwest in longer term forecasts, which is supportive to prices, especially if the expected rain doesn't provide enough moisture, the analyst said.

 

The market is hanging on every forecast and the midday weather updates could have a major impact on where corn settles Thursday, a trader said.

 

In the western U.S. Midwest scattered showers and thunderstorms are forecast for Friday with clearing expected Saturday, DTN Meteorologix Weather said. Rainfall amounts expected are between 0.30-1.50 inches with the heaviest concentration in northern and eastern areas. Temperatures are expected to average near-to-above-normal Friday and Saturday.

 

In the eastern U.S. Midwest, there is a chance for scattered showers and thundershowers Friday and scattered to widely scattered thunderstorms Saturday, Meteorologix Weather said. Rainfall in the period should average 0.30-1.50 inches in northern and central Illinois and 0.25-1.00 inch and locally heavier elsewhere in the region. Temperatures are forecast near-to-below normal Friday and Saturday.

 

In the six-to-10 day outlook, temperatures are expected to average near-to-above normal and rainfall should average near-to-below normal.

 

Corn is beginning to defer to soybean and wheat so any volatility in either direction could influence corn prices, the trader said.

 

Weekly corn export sales totaled 988,400 metric tonnes for the week ended June 14, the U.S. Department of Agriculture reported, above the 500,000-850,000 tonnes expected by analysts. Included in the total were sales of 161,500 tonnes for delivery in the 2007-08 marketing year. Japan, Taiwan and Egypt were the largest buyers on the week.

 

Sales were better than expected, but the weather is the focus, a commission house analyst said.

 

The USDA also announced a sale of 120,000 metric tonnes of corn for delivery in 2006-07 to unknown destinations.

 

On daily technical charts December corn closed near mid-range as mixed weather forecasts limited volatility, a market technician said. Market bulls still have the technical advantage and it will take a close below major psychological support at US$4.00 per bushel to produce some chart damage, the technician said. In addition more selling could indicate the possibility of a bearish double-top reversal pattern forming on the daily bar chart.

 

The bulls' next upside price objective remains closing prices above solid resistance at US$4.15 per bushel, with the bear's next downside objective closing prices below major psychological support at US$4.00.

 

First resistance for December corn is seen at US$4.10 and then at Wednesday's high of US$4.12 1/4. First support is seen at US$4.02 1/2 and then at US$4.00.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled higher on short-covering with the benchmark September contract up RMB/16 at RMB1,594 per metric tonne.