July 31, 2007

 

CBOT Corn Outlook on Tuesday: Up 1-2 cents on crop ratings, weather

 

 

Chicago Board of Trade corn futures are expected to begin Tuesday's day session activity 1 to 2 cents higher following steady prices in overnight activity, lower crop ratings and supportive near-term weather, analysts said.

 

In overnight electronic trading, September corn rose 1 1/4 cents to US$3.24 3/4 per bushel, and December gained 1 cent to US$3.41. E-CBOT volume in December was 6,642 contracts.

 

Crop conditions declined slightly more than expected and the near-term forecast is supportive, so corn should trade higher and in line with the gains set in overnight trade, an analyst said. However, the perception is the crop is already "made" in much of the corn belt though there are some areas that could be impacted by hot and dry weather, the analyst added.

 

The U.S. Department of Agriculture reported 58% of the U.S. corn crop was in good-to-excellent condition, down four percentage points from the previous week and beyond analyst expectations of up to a three percentage point decline in the ratings.

 

In Iowa, 60% of the crop was rated in good-to-excellent condition, down three percentage points while in Illinois 78% of the crop was in good-to-excellent condition, down from the 81% rating last week.

 

Corn will trade higher on the decline in crop conditions but it rallied sharply in second half of Monday's session in anticipation of the report, a commission house analyst said. There is enough rain in the forecast to limit the upside with enough heat to limit the downside, the analyst said.

 

Twenty-five percent of the crop was in the dough stage compared to the five-year average of 20%. Four percent of the crop was reported in the dent stage.

 

In the western U.S. Midwest, scattered showers and thunderstorms are expected to develop Wednesday and into Thursday with rainfall totals of 0.10-0.50 inch expected, with the heaviest rainfall in northwest sections, DTN Meteorologix Weather said. Dry weather returns to the region on Friday. Temperatures are expected to average near-to-above normal with highs reaching from the middle 80s to middle 90s Fahrenheit.

 

In the eastern U.S. Midwest, dry weather is forecast through Thursday with the possibility of a few light showers on Friday, Meteorologix Weather said.

 

Temperatures are expected to average near-to-above normal with highs ranging from the middle 80s to middle 90s Fahrenheit.

 

In the 6-to 10-day outlook, temperatures are expected to average near-to-above normal and rainfall is predicted near-to-below normal.

 

On daily technical charts, December corn traded an outside day up and closed nearer the session high on bargain hunting and supportive weather forecasts, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at US$3.50 per bushel, with the bears' downside price objective closing prices below last week's low of US$3.24 1/2.

 

First resistance is seen at US$3.45, and then at US$3.50. First support is seen at US$3.35, and then at US$3.29.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled higher with the benchmark January contract up RMB14 at RMB1,522 per metric tonne.