July 24, 2007

 

CBOT Corn Outlook on Tuesday: 3-4 cents higher on crop conditions, higher wheat

 

 

Chicago Board of Trade corn futures are expected to start Tuesday's day session 3 to 4 cents higher after an unexpected decline in U.S. crop conditions and on spillover support from higher wheat prices, analysts said.

 

In overnight electronic trading September corn gained 4 cents to US$3.14 per bushel, and December rose 4 1/4 cents to US$3.29 3/4. E-CBOT volume in December was 6,588 contracts.

 

Corn should open higher following gains in overnight trading after the U.S Department of Agriculture's crop progress report released Monday afternoon lowered U.S. corn conditions by two percentage points from the previous week, with 62% of the crop in good-to-excellent condition, an analyst said.

 

"It was a surprise," a floor manager said. "Everyone expected improvements in conditions after the rains we got in the Midwest."

 

Corn is also expected to be a follower of wheat Tuesday as heat in the U.S. Plains and deteriorating conditions in Europe's wheat crop are supporting prices, analysts said. Wheat is expected open of 15-17 cents higher.

 

However, overnight forecasts for the eastern U.S. Midwest predicting average temperatures and rainfall through the end of the week should restrict a hefty move up in corn prices, the floor manager said.

 

After recent losses with corn reaching its lowest level since October 2006 on Monday, prices are due for a bounce, or at least some consolidation, an analyst said.

 

In the western U.S. Midwest, weather conditions will be mostly dry until Thursday and Friday when rainfall totals will be near 0.25-0.75 inch. Mostly dry conditions are expected south on Saturday, and dry conditions for the region on Sunday, DTN Meteorologix Weather said.

 

Temperatures in the region should be above normal.

 

In the eastern U.S. Midwest, dry conditions are expected through Wednesday and will be followed by rainfall Thursday through Saturday totaling 0.30-1.00 inch of rain, DTN said.

 

Temperatures in the region will be below normal through Wednesday and then near normal through the weekend , DTN said.

 

The 6-10 day outlook calls for temperatures near-to-above normal and rainfall near-to-below normal.

 

On daily technical charts, December corn prices gapped lower on the daily bar chart Monday, closed near the session low and hit a fresh nine-month low, a technical analyst said. The weekend weather forecasts predicted more rains and cooler temperatures in the corn belt this week than originally predicted.

 

The next downside price objective for the bears is to close prices below solid support at US$3.17. The bulls' next upside price objective is closing prices above solid technical resistance at US$3.40.

 

First resistance for December corn is seen at Monday's high of US$3.30 and then at US$3.36. First support is seen at Monday's low of US$3.24 1/2 and then at US$3.20.

 

In other corn news, corn futures on China's Dalian Commodities Exchange were lower with the benchmark January contract down RMB12 at RMB1,495 per metric tonne.