July 17, 2007

 

CBOT Corn Outlook on Tuesday: 2-3 cents lower on follow-through selling, rain

 

 

Chicago Board of Trade corn futures are predicted to start Tuesday's day session activity 2 to 3 cents lower as follow through selling from Monday's limit down losses and weaker prices in overnight trading, analysts said.

 

In overnight electronic trading September corn slipped 2 3/4 cents to US$3.32 per bushel, and December fell 2 cents to US$3.46 1/2. e-CBOT volume in December was 10,163 contracts. Corn should trade lower on the opening on follow through from Monday's limit down losses and rain overnight in parts of the U.S. Midwest, a commission house analyst said.

 

Forecasts for additional moisture in the eastern U.S. Midwest over the next several days should also weigh on attempts to rally, he said. The market could start out lower but could see some support from weaker-than expected U.S. weekly crop conditions, a trader said.

 

The U.S. Department of Agriculture reported Monday that 64% of the U.S. corn crop was in good-to-excellent condition for the week ended July 15, down six percentage points from the previous week and below analyst expectations. In Iowa, the nation's largest corn producing state, 63% of the crop was rated in good-to-excellent condition, down nine percentage points, while in Illinois, 79% of the crop was rated good-to-excellent, two percentage points lower than last week. Corn could trade both sides Tuesday, a floor analyst said.

 

Although parts of the U.S. corn belt are receiving good rain, there are sharply higher temperatures further west and the market will be waiting on the midday weather updates for direction, he said. The U.S. Midwest may have additional rainfall this week, especially in eastern Iowa and areas further east, DTN Meteorologix Weather said.

 

In the western U.S. Midwest, north-east and west-central Iowa will likely have additional rainfall through Wednesday, with the rest of the region seeing only a few possible showers in the period. There is a chance for showers or thunderstorms Thursday in parts of Nebraska, southwest Iowa and northern Missouri. Rainfall totals from Tuesday through Thursday should average 0.25-1.00 and locally heavier in eastern and southern Iowa and northern Missouri.

 

Amounts of 0.10-0.50 inch and locally heavier amounts are possible in the rest of the region, Meteorologix Weather said. Temperatures are expected to range from 88 to 97 degrees Fahrenheit Wednesday and 83 to 89 degrees on Thursday.

 

In the eastern U.S. Midwest, scattered showers and thunderstorms will spread southward through Thursday with rainfall potential 0.30-1.50 inches and locally heavier with good coverage. Temperatures are expected to average above normal in western and southern areas Wednesday and near to below normal northeast, before averaging below normal 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-below normal west and near-to-above normal east.

 

On daily technical charts, a big bear pattern has formed on the daily technical charts after prices gapped open lower Monday as weather forecasts over the weekend flip-flopped to include rain and cooler temperatures this week, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at US$3.56 per bushel, with the bears' downside price objective closing prices below US$3.36.

 

First resistance is seen at US$3.50, and then at US$3.56. First support is seen at US$3.45, and then at US$3.40.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled higher with the benchmark January contract down RMB15 at RMB1,503 per metric tonne.