July 20, 2007

 

CBOT Corn Outlook on Friday: Higher start on weather, soy supportive

 

 

Chicago Board of Trade corn futures are predicted to start Friday's day session activity 2 to 3 cents higher on warmer, drier weather conditions forecasted into next week in the U.S. Midwest, and an expected higher opening in soybeans, analysts said.

 

In overnight electronic trading September corn gained 3 1/4 cents to US$3.24 1/2 per bushel, and December rose 3 3/4 cents to US$3.40. E-CBOT volume in December was 5,263 contracts.

 

Corn should open higher following stronger overnight trade on weather forecasts that predict drier weather into Tuesday and higher temperatures into Thursday, an analyst said. Traders are also expected to cover their short positions before the weekend in anticipation of the weather forecasts, the analyst said.

 

While weather will grab the corn market's attention today, part of the corn market's focus will be directed to soybeans as the weather is more critical for the crops' development at this stage of the season than it is for corn, a trader said. Corn is nearly through its critical development stage, while soybeans development will depend on favorable weather conditions into August, the trader added.

 

"I think the corn crop is already made, now the corn market will follow the beans," an analyst said.

 

"Whatever beans do today, that's what corn is going to do," another analyst said.

 

In the western U.S. Midwest, weather conditions are expected to be mainly dry Friday through Monday with the chance of a few thundershowers east on Tuesday, DTN Meteorologix Weather said.

 

Temperatures in the region will average above normal in the west and north and near normal southeast on Monday, and average above normal in the west and north and near normal southeast through Tuesday.

 

In the eastern U.S. Midwest, dry conditions are predicted Friday through Monday with a few light afternoon thundershowers Tuesday, DTN Meteorologix Weather said.

 

Temperatures in the region will average below normal Monday and average near-to-above normal west and near-to-below normal east through Tuesday, DTN said.

 

The 6-10 day outlook calls for temperatures to average near-to-above normal and rainfall near-to-below normal, with near normal more likely in the east and below normal more likely through the west.

 

On daily technical charts, December corn closed near mid-range Thursday after finding pressure from beneficial rains in previously dry areas of the corn belt, but the downside was limited by forecasts of hotter, drier weather, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid technical resistance at US$3.50. The next downside price objective for the bears is to close prices below solid support at this week's low of US$3.31 1/2.

 

First resistance for December corn is seen at Thursday's high of US$3.39 1/2 and then at US$3.45. First support is seen at US$3.31 1/2 and then at US$3.25.

 

In other corn news, corn futures on China's Dalian Commodities Exchange were lower with the benchmark January contract down RMB5 at RMB1,507 per metric tonne.