July 3, 2007

 

CBOT Corn Outlook on Tuesday: Seen 2-3 cents lower ahead of holiday

 

 

Chicago Board of Trade corn futures expected to start trading 2 to 3 cents lower Tuesday as near-term weather favorable to crop development and Monday afternoon's steady crop condition ratings are expected to undermine prices at the start of day session trading, with the mid-week holiday just ahead, analysts said.

 

The CBOT is closed Wednesday in observance of the Independence Day holiday.

 

In overnight electronic trading, July corn fell 3 1/2 cents to US$3.27 per bushel, September declined 2 1/4 cents at US$3.37 1/2 and December ended down 3 1/4 cents at US$3.46 3/4. e-CBOT volume in December was 5,223 contracts.

 

Corn is expected to start out lower as the crop conditions report revealed few problems with the majority of the corn crop with ratings firm this week and above those of a year ago, an analyst said.

 

Seventy-three percent of the U.S. corn crop was rated in good to excellent condition, unchanged from last week and five percentage points above last year's rating.

 

Among the major U.S. corn producing states, Illinois' rating was unchanged at 79% good-to-excellent, Iowa was down two percentage points at 76% good to excellent and Nebraska's rating was unchanged, with the crop rated 85% good to excellent.

 

Corn should open under modest pressure as the current weather forecasts indicate non-threatening weather for the majority of the U.S. corn belt, a trader said.

 

In the western U.S. Midwest, scattered showers are possible Tuesday night into Wednesday with amounts of 0.10 to 0.75 inch and locally heavier, DTN Meteorologix Weather said. Drier weather returns to the region on Thursday. Temperatures are expected to average near normal to slightly above normal.

 

In the eastern U.S. Midwest, scattered showers and possible thundershowers are predicted for Tuesday night into Wednesday and the showers may linger near the Ohio river on Thursday, Meteorologix Weather said. Temperatures are expected to average near normal to slightly above normal Wednesday and Thursday.

 

In the 6- to 10-day outlook, temperatures are expected to average near to above normal and rainfall is predicted near-to-above normal west and north and near to below normal southeast.

 

On daily technical charts, December corn closed lower and traded an "inside day." Serious near-term technical damage has occurred but the market is well overdone on the downside on a short-term technical basis, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at US$3.65 per bushel, with the bears' next downside price objective closing prices below solid support at US$3.44 per bushel.

 

First resistance is seen at US$3.53, Monday's high, and then at US$3.56. First support is pegged at US$3.44 and then at US$3.40.

 

Deliveries posted against the Chicago Board of Trade July corn futures were 913 contracts Tuesday. Large issuers included the customer account of Man Financial, which issued 522 contracts, and the customer account of Kottke, which issued 120 contracts. Large stoppers included the customer account of UBS Securities, which stopped 625 contracts, and the customer account of Man Financial, which stopped 191. The last trade assigned was June 22.

 

In other corn news, China will likely issue a supplemental export quota for corn if the weather is favorable in July and August, a key time for the harvest, an official with a major state-owned corn trader said.

 

South Korea's Major Feedmill group purchased 55,000 metric tonnes of optional origin corn, a trader in Seoul said Tuesday.

 

Corn futures on China's Dalian Commodities Exchange settled slightly higher with the benchmark January contract up RMB5 at RMB1,569 per metric tonne.