July 9, 2007

 

CBOT Corn Outlook on Monday: Called 4-7 cents lower on improving US weather

 

 

Chicago Board of Trade corn futures are expected to begin trading 4 to 7 cents lower Monday on forecasts for near-term rain and cooler weather for much of the U.S. Midwest over the next several days, analysts said.

 

In overnight electronic trading, July corn fell 7 1/4 cents to US$3.27 1/4 per bushel, September declined 4 1/4 cents to US$3.37 1/4 and December dropped 4 1/2 cents to US$3.47 1/2. E-CBOT volume in December was 11,662 contracts.

 

Corn should trade on the defensive with the weather forecast for the next several days indicating cooler temperatures and scattered showers in the U.S. Midwest, easing concerns about crop stress due to excessive heat and limited moisture as the crop begins to pollinate, an analyst said.

 

Although corn is expected to begin trading lower on the cooler weather expected in the next several days the downside might be limited as there doesn't appear to be much rain in some forecasts for the western half of the U.S. Midwest, a commission house analyst said.

 

In the western U.S. Midwest, there is a chance for scattered to widely scattered showers and thundershowers Monday and Tuesday with amounts 0.10-0.50 inch and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to average near to above normal Monday and below normal Tuesday and Wednesday.

 

In the eastern U.S. Midwest, a few thundershowers are possible Monday for northern and western areas of the region with scattered showers and thundershowers across the region Tuesday, Meteorologix Weather said. Rainfall amounts during this period are 0.10-0.75 inch and locally heavier with the largest amounts in eastern and southern locations. Temperatures are expected to average from the upper 80s to middle 90s degrees Fahrenheit Monday and, 80s F to low 90s F Tuesday and cooler Wednesday.

 

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

 

On daily technical charts, December corn closed at the weekly high close on short covering after recent heavy losses, a technical analyst said. Serious technical damage has occurred recently but a strong close on Monday would indicate that a near-term low is in place, the analyst said.

 

The bulls' next upside price objective remains closing prices above solid resistance at US$3.65 per bushel, with the bears' next downside price objective closing prices below US$3.36.

 

First resistance is seen at US$3.52 1/2, and then at US$3.56. First support is seen at US$3.50, and then at Friday's low of US$3.45. Deliveries posted against the Chicago Board of Trade July corn future were 1,053 contracts Monday. Large issuers included the customer account of Man Financial which issued 513 contracts and the customer account of Cunningham Commodities, which issued 103 contracts. Large stoppers included the customer account of Man Professional Clearing, which stopped 296 contracts, and the house account of ADM Investor Services which stopped 319 contracts. The last trade assigned was July 6.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the benchmark January contract down RMB4 at RMB1,536 per metric tonne.

 

Monday morning the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 11:00 a.m. EDT (1500 GMT).