July 10, 2007

 

CBOT Corn Outlook on Tuesday: Seen 1-2 cents lower on near-term weather

 

 

Chicago Board of Trade corn futures are predicted to begin trading 1 to 2 cents lower Tuesday, reflecting near-term weather that is supportive to crop development and mostly weaker prices in overnight trade, analysts said.

 

In overnight electronic trading, July corn declined 4 1/4 cents to US$3.28 1/4 per bushel, September gained 1/4 cent to US$3.39 1/2 and December slipped 1/2 cent to US$3.49 3/4. E-CBOT volume in December was 10,245 contracts.

 

Corn should start out lower but could trade on either side Tuesday, an analyst said. The near-term weather is conducive for crop development but several longer-term outlooks call for hot and dry conditions to return to the U.S. Midwest, he said.

 

Although crop conditions came in as expected, both Iowa and Minnesota, two large corn producing states, saw conditions decline and taken with the longer term weather concerns could limit the downside, a commission house analyst said.

 

Seventy percent of the U.S. corn crop was in good-to-excellent condition as of July 8 according to the U.S. Department of Agriculture, down three percentage points from last week and in line with analysts' expectations. Iowa's corn crop was rated 72% good-to-excellent, down four percentage points from last week. In Minnesota, 67% of the crop was rated in good-to-excellent shape, down from the 74% reported last week.

 

In the western U.S. Midwest, mainly dry weather is forecast for Wednesday with a chance for a few light sprinkles and showers expected on Thursday, DTN Meteorologix Weather said. Temperatures are expected to average below normal Wednesday and Thursday.

 

In the eastern U.S. Midwest, scattered showers and thundershowers are expected through Thursday, with amounts of 0.25-1.00 inch and locally heavier, Meteorologix Weather said. The heaviest of this activity is expected in south and eastern areas. Temperatures are expected to average below normal both Wednesday and Thursday.

 

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 normal east and near to below normal west.

 

On daily technical charts, December corn closed nearer the session high Monday but if weather forecasts remain benign its unlikely that prices will soon challenge last month's high, a technical 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$3.53, last week's high and then at US$3.56. First support is seen at US$3.44 1/2, and then at US$3.40.

 

Deliveries posted against the Chicago Board of Trade July corn future were 896 contracts Tuesday. Large issuers included the customer account of Man Professional Financial which issued 496 contracts and the customer account of Fortis, which issued 90 contracts. Large stoppers included the customer account of JP Morgan, which stopped 220 contracts, and the customer account of Rand which stopped 495 contracts. The last trade assigned was July 9.

 

In other corn news, China exported 160,000 metric tonnes of corn in June, up from 3,923 tonnes last year, according to preliminary data issued by the country's General Administration o Customs Tuesday. In the first six months of 2007 the country exported 3.67 million tonnes, up 61.8% from 2.27 million in the year earlier period.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the benchmark January contract down RMB20 at RMB1,516 per metric tonne.