June 22, 2007

 

CBOT Corn Outlook on Friday: Down 3-4 cents on US mid-west rains

 

 

Chicago Board of Trade corn futures are predicted to begin day session trading 3-to-4 cents lower Friday as rain across the U.S. Midwest overnight and continuing Friday morning is expected to depress prices on the opening, traders said.

 

In overnight electronic trading, July corn fell 4 1/4 cents to US$3.80 3/4 per bushel, September declined 3 3/4 cents to US$3.91 and December also fell 3 3/4 cents to US$3.95 1/4. E-CBOT volume in December was 6,466 contracts.

 

"It rained overnight in parts of the U.S. Midwest and the radar shows additional moisture is falling in the eastern U.S. Corn Belt which needs the rain and that will press prices lower on the opening," an analyst said.

 

The current rain should eliminate some dryness concerns in Indiana and Ohio, but more rain is needed, the analyst said. Late next week there are forecasts for additional rain in that region, however a lot can happen and traders' attention will remain on the midday weather updates, he added.

 

December corn has fallen 32 cents from its high on Monday and given the volatility in prices this week there could be some position squaring later in the session and after the noon weather updates, a floor trader said. It's about how the market perceives the forecasts, he added.

 

Technically December is near its 100-day moving average and if it can hold above it, that could draw some short-covering to the market, a commission house analyst said.

 

In the western U.S. Midwest episodes of scattered showers and thunderstorms are possible over the next 24-48 hours with amounts of 0.25-1.00 inch and locally heavier expected, with eastern sections of the region garnering the heaviest amounts, DTN Meteorologix Weather said. Conditions turn drier Sunday and into early next week. Temperatures are expected to average near-to-below-normal early through Saturday and then near-to-above normal afterwards, Meteorologix Weather said.

 

In the eastern U.S. Midwest, scattered showers and thunderstorms are expected through Saturday with light showers or dry conditions possible Sunday. Amounts expected are 0.25-1.00 inch and locally heavier with Illinois expected to receive the larger amounts, Meteorologix said. Temperatures are forecast near-to-below normal Friday and Saturday and then near-to-above normal thereafter.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal and rainfall should average near-to-above normal west and near-to-below normal east.

 

On daily technical charts December corn hit a fresh two-week low on wetter weather forecasts for the eastern Corn Belt and profit taking, a technical analyst said. The close below the US$4.00 did begin to produce some-near term chart damage and price action Thursday also filled on the downside an upside price gap on he daily bar chart.

 

The bulls' next upside price objective is closing prices above solid resistance at US$4.10 per bushel, with the bear's next downside objective closing prices below solid chart support at US$3.85, the analyst said.

 

First resistance for December corn is seen at US$4.00 and then at US$4.05. First support is seen Thursday's low of US$3.95 and then at US$3.92.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the benchmark September contract down RMB/7 at RMB1,587 per metric tonne.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders' data for the period ending June 19.