July 7, 2006

 

CBOT Corn Outlook on Friday: Seen 3-5 cents lower on weather forecasts

 

 

Corn futures are called to open 3-5 cents lower Friday, keeping in line the tone set in the e-CBOT session as overnight weather models were viewed as bearish, sources said.

 

In overnight e-CBOT trading, July corn fell 4 3/4 cents to US$2.40 1/2 and December corn fell 5 1/2 cents to US$2.64 3/4.

 

The near-term forecast is calling for some additional precipitation, and if the crop gets some rain, it should help the corn get through its key pollination stage, said Jason Roose, an analyst with U.S. Commodities in West Des Moines, Iowa.

 

The market has built premium back in and its trying to test old highs as the market has staged a nice 25 cent rally from recent low levels, he added.

 

The market was overdone on the upside Thursday, and it looks like the market will take some premium out, a commission house analyst said.

 

On Thursday, December corn prices closed near the session high and hit a fresh four-week high. A weak upper level trough is predicted to form over the central plains during the weekend and move eastward across the U.S. Midwest early next week, DTN Meteorologix Weather said. Ahead of the trough, temperatures are expected to be hotter, with cooler temperatures following the trough, DTN Meteorologix added.

 

In the 6-10-day outlook for western U.S. Midwest, temperatures are expected to average above normal and precipitation near to below normal.

 

In the eastern U.S. Midwest, the 6-to-10 day outlook predicts temperatures to average near to above normal and rainfall near to below normal, DTN Meteorologix Weather said.

 

Weekly corn export sales were 1,274.7 million metric tonnes for the week ended June 29. Included in the total were sales of 459,400 tonnes for delivery in the 2006-07 crop year.

 

Analysts termed the sales as routine. The report was delayed a day due to the July 4 holiday.

 

Deliveries posted against the July contract Friday totaled 1,978 contracts. The customer account of Man Financial issued 441 contracts and the customer account of Cunningham Commodities issued 193 contracts. The customer account of Man Financial stopped contracts and the customer account of Dowd Wescott Group stopped 296 contracts.

 

On technical charts, bulls are gaining upside technical momentum, amid a weather market scare unfolding in the grains, a technical analyst said. The next upside price objective in December corn for the bulls is closing prices above chart resistance at US$2.75. A close below solid technical support at US$2.59 1/2 would provide the bears with some fresh downside technical momentum, the analyst noted.

 

First resistance for December corn is seen at US$2.72 - Thursday's high - and then at US$2.75. First support is seen at US$2.67 - Thursday's low--and then at US$2.65.

 

In other corn news, corn futures on China's Dalian Commodities exchange settled lower, pressured by losses in the spot market, an analyst said. The most widely held March 2007 contract settled at RMB1,448/tonne, down RMB10.