July 18, 2007

 

CBOT Corn Outlook on Wednesday: 1-3 cents higher on corrective bounce

 

 

Chicago Board of Trade corn futures are predicted to start Wednesday's day session activity 1 to 3 cents higher as prices bounce back from steep losses set over the past several days, analysts said.

 

In overnight electronic trading September corn gained 1 cent to US$3.24 1/4 per bushel, and December rose 1 1/4 cents to US$3.38 3/4. e-CBOT volume in December was 5,245 contracts.

 

Corn should open higher as prices stabilized overnight and after the recent sharp declines, an analyst said. In the past two sessions December corn has lost almost 37 cents.

 

The market has sold off on favorable near-term weather and technical selling over the past several days, but the forecasts are drier with temperatures expected to be hotter than normal in longer-term outlooks which could support prices, a commission house analyst said.

 

Corn futures followed the sharp declines in soybean futures Tuesday and could see some spillover support from soybeans Wednesday with soybeans expected to be moderately higher, a floor trader said.

 

"We'll start a little better and see if we can recover a little," an analyst said.

 

Rain is forecasted in the U.S. Midwest over the next several days, but some weather models predict warmer and drier weather in the mid-range forecasts, analysts said.

 

In the western U.S. Midwest, Nebraska, most of Iowa and northern Missouri should receive 0.30-1.00 inch of rainfall Wednesday through early Thursday, with a few thunderstorm possibilities in South Dakota and southern Minnesota. Most areas should remain dry from late Thursday through the weekend, DTN Meteorologix Weather said.

 

Temperatures for the region are expected to be near-to-below normal Thursday and below normal Friday, DTN reported. During the weekend, temperatures should be near-to-above normal in the west and north, and below normal in the southeast.

 

In the eastern U.S. Midwest, rains totaling 0.30 to 1.50 inches are expected Thursday, with drier conditions Friday through the weekend, DTN said.

 

Temperatures for the region are expected at near-to-above normal Wednesday and below normal north and above normal south Thursday.

 

In the 6-10 day outlook, temperatures are expected to average near-to-above normal west and near-to-below normal east with rainfall near-to-below normal in the west and central areas and near-to-above normal east.

 

On daily technical charts, December corn hit an 8 1/2-month low as weather forecasts for the corn belt increased rain possibilities, a technical analyst said. The market saw a downside breakout from a big bear flag pattern on the daily bar chart, the analyst said.

 

The bulls' next upside price objective is closing prices above solid technical resistance at US$3.50. Little downside price potential is seen with prices at their present levels, the analyst said.

 

First resistance is seen at US$3.40, and then at US$3.45. First support is seen at Tuesday's low of US$3.31 1/2, and then at US$3.30.

 

In other corn news, corn futures on China's Dalian Commodities Exchange were mixed with the benchmark January contract up RMB2 at RMB1,505 per metric tonne.