July 2, 2009

 

CBOT Corn Outlook on Thursday: Down 4-6 cents on high acreage, liquidation

 

 

Chicago Board of Trade corn futures are expected to open lower Thursday as traders are likely to exit positions before the Independence Day weekend after a tumultuous week following the surprising acreage report.

 

The CBOT is closed Friday for the holiday.

 

Corn is called down 4 to 6 cents. In overnight trade, July corn was down 6 1/4 cents at US$3.45 1/2 per bushel, and December was down 5 3/4 cents at US$3.63 1/2.

 

Though corn futures posted light gains Wednesday, the U.S. Department of Agriculture's acreage report is still weighing on the market, traders and analysts said. "It's just too much corn," a floor trader said.

 

"The world had been led to believe that it was only a matter of how much less acreage had been planted to corn, not whether there was less corn planted. Instead, there was more corn planted," said Dennis Gartman in a commentary.

 

A rally in soybeans Wednesday supported corn, but the soybean market posted losses in overnight trade. Mike Zuzulo, Risk Management Commodities senior analyst, said this will likely affect corn. "When traders see top-heavy price action in beans, they'll sell corn," he said.

 

Liquidation is expected before the long weekend, a floor trader said. Zuzolo also said Thursday's unemployment data release could indirectly touch corn prices, with crude oil and gold weakening and the U.S. dollar strengthening.

 

Weather is now the trade's primary concern as July marks a critical time in corn's development period. Short-term, the Midwest will see mostly dry conditions through the holiday weekend, with periodic showers throughout. The exception is developing showers and thunderstorms in the southwest area of the region, said DTN Meteorlogix. Temperatures will remain near to below normal. Some forecasters are calling for heat in the far western corn belt early next week.

 

In export news, net corn export sales of 1,155,100 metric tonnes for the week ended June 25 were up 68% from the previous week and 67% from the prior 4-week average, the USDA said in its weekly report.

 

A technical analyst said first resistance for December corn is seen at Wednesday's high of US$3.73 3/4 and then at US$3.80. First support is seen at Wednesday's low of US$3.61 3/4 and then at US$3.55.