August 1, 2007

 

CBOT Corn Outlook on Wednesday: 1-2 cents Higher On Dry Overnight Forecasts

 

 

Chicago Board of Trade corn futures are expected to start Wednesday's day session 1 to 2 cents higher on hot, dry weather forecasts in the U.S. Midwest, analysts said.

 

In overnight electronic trading, September corn was unchanged at US$3.25 3/4 per bushel, and December rose 1/4 cent to US$3.42 1/2. E-CBOT volume in December was 5,021 contracts.

 

Corn is expected to add a weather premium to prices on overnight forecasts calling for hotter, drier weather this week and into next week in the U.S. Midwest, analysts said. High temperatures reaching the mid-90s with little rainfall in the near-and long-term are expected to deplete soil moisture and add stress to corn and soybean crops, DTN Meteorologix said.

 

"We certainly need some pretty decent rain here," a floor manager said. However, rainfall chances in the near-term are light with poor coverage, the floor manager said.

 

The weather forecasts and the recent decline in crop conditions are also adding to ideas of lower yield projections, an analyst said, which could be supportive.

 

Stronger prices in wheat and soybeans are also expected to spillover into corn prices on higher European wheat prices, ideas that recent profit taking has run its course and supportive weather conditions for soybeans.

 

In the western U.S. Midwest, mostly dry weather conditions are expected through Friday with light showers Saturday and mostly dry Sunday, DTN reported. Thundershowers on Monday and Tuesday are possible with rainfalls of 0.25-1.00 inch. Temperatures should be near-to-above normal with highs in the mid-80s to mid-90s.

 

In the eastern U.S. Midwest, dry conditions are expected through Friday with a few light showers Saturday through Tuesday, with activity favoring the Great Lakes region. Temperatures will be above normal with highs in the upper 80s to mid-90s.

 

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

 

On daily technical charts, December corn prices Tuesday closed near the session high. More bargain-hunting buying amid a hot and dry near-term forecast for the Corn Belt boosted corn again, but gains were again limited by losses in the wheat market. The bulls are gaining confidence that a near-term market low is in place, a technical analyst said.

 

The next downside price objective for the bears is to close prices below solid support at last week's low of US$3.24 1/2. The bulls' next upside price objective is closing prices above solid technical resistance at US$3.50.

 

In December, first resistance for December corn is seen at US$3.45 and then at US$3.50. First support is seen at Tuesday's low of US$3.38 and then at US$3.36.

 

In other corn news, corn futures on China's Dalian Commodities Exchange were mixed with the benchmark January contract up RMB2 at RMB1,524 per metric tonne.