June 26, 2008

 

CBOT Corn Outlook on Thursday: Higher on weather, follow-through buying

 

 

Chicago Board of Trade corn futures are expected to open 6 to 8 cents higher Thursday on weather concerns and follow-through support from Wednesday's gains.

 

In overnight trading, July corn was up 8 1/4 cents to US$7.38 1/4, September corn was up 8 1/4 cents to US$7.52 3/4 and December corn was up 7 3/4 cents to US$7.72 3/4.

 

Analysts say the market will likely maintain its momentum headed into the weekend. Traders are anticipating the U.S. Department of Agriculture's planted acreage report on Monday, which will give a glimpse into damage caused by recent flooding.

 

"This market is all about yesterday showing its true colors," said Don Roose, president of U.S. Commodities. "My gut says we're going to see end-of-month and end-of quarter buying ahead of the report."

 

Concerns about crop production continue to support the market, as a wet spring and historic flooding in parts of the U.S. corn belt earlier this month is followed by more rain this week. Analysts say yields will most likely suffer as a result.

 

The DTN Meteorlogix forecast calls for scattered to widely scattered showers and thunderstorms Thursday, Friday and Saturday. There have already been heavy rains in parts of the corn belt this week, particularly in northern Missouri, where some areas saw more than 5 inches.

 

But some traders said that overall, the weather isn't very bullish, since those whose fields have already flooded have little chance for a decent corn crop anyway. Most growers could use some rain, said Roose.

 

"It's probably helping 90% to 95% of people, and hurting 5% to 10%," Roose said.

 

Planted acreage in Monday's report is seen dropping on average to 85.321 million acres from the USDA's March projection of 86.014 million acres, according to a Dow Jones Newswires survey of analysts. Analysts said the projection could have dropped further given the flooding, but that growers had increased their corn plantings prior to the damage.

 

Although analysts say the acreage report is highly anticipated, they differ on whether it will paint an accurate picture. Some say the USDA has taken extra steps to improve its accuracy by conducting additional surveying, but others say the government won't be able to fully gauge the flood's impact until it releases another report in August.

 

The USDA reported net export sales of 402,800 metric tonnes for the week ended June 19. Roose called the numbers "disappointing."