June 20, 2008

 

CBOT Corn Outlook on Friday: Down slightly, but potential for rebound

 

 

Chicago Board of Trade corn futures are called 1 to 2 cents lower Friday, but two-sided trade is expected as weather re-emerges as a potential problem for farmers, traders said.

 

In overnight trading, July corn was down 1/4 cent to US$7.27 1/2 per bushel, September corn was down 1/2 cent to US$7.41 1/4 and December corn was down 1 1/2 cents to US$7.60.

 

Rain in Illinois and Indiana, and growing possibilities for rain next week, could cause more problems for growers trying to recover from what has already been historic flooding, said Mike Zuzolo, senior market analyst for Risk Management Commodities.

 

"Corn maybe has been a follower this week" of soybeans, Zuzolo said. "It could become a leader again today."

 

T-storm Weather says that after mostly dry weather this week, there is the possibility of thunderstorm clusters next week "as a wetter pattern redevelops."

 

Prices fell Thursday on weaker crude oil, following China's announcement that it would raise fuel prices. Zuzolo said inflation concerns in India also weighed on the market.

 

But crude oil rebounded early Friday, which along with a weaker dollar could fuel a rebound in corn, analysts said.

 

Views are mixed on an Informa acreage report expected to be released this morning. A trader said the market will wait on the report to see if it projects a significant drop in corn acres, although Zuzolo said the market will pay greater heed to U.S. Department of Agriculture numbers than any private reports. The USDA will release its acreage report June 30.

 

Zuzolo said it is crucial that the market rations demand now, rather than waiting until the USDA confirms reduced yields and acreage losses. The government didn't reveal the full extent of the historic 1993 flooding until late in the summer, he said.

 

Analysts said the market is looking for signs that higher prices are reducing the demand from ethanol and feed.

 

On Thursday, a Bush administration official said that even if the government released idled farm land from conservation reserves now, there wouldn't be enough time for farmers to plant corn on it this year.

 

The next upside price objective is to push and close December prices above technical resistance at the contract high of US$7.91 1/2. The next downside price objective is to push and close prices below solid support at Thursday's low of US$7.51 1/4.

 

First resistance for December corn is seen at US$7.69 and then at US$7.75. First support is seen at US$7.55 and then at Thursday's low of US$7.51 1/4.