August 2, 2006

 

CBOT Corn Outlook on Wednesday: Called 2-3 cents higher, weather supports

  

 

Corn futures are predicted to begin trading 2-3 cents higher Wednesday following the tone set in active overnight trading and on supportive weather forecasts, sources said.

 

In overnight e-CBOT trading, September corn rose 2 3/4 cents at US$2.43 1/4 per bushel and December also ended up 2 3/4 cents to US$2.60 1/2. Volume in December on e-CBOT overnight was 19,347 contracts.

 

The longer term forecast calls for more hot and dry weather for the region, plus some areas of the western corn belt appeared to have missed receiving some precipitation overnight, a commission house analyst said.

 

Corn will be higher to start on weather, a floor trader said. The market is sensitive to the impact the weather might have on yields, particularly in the western U.S. Midwest, he added.

 

In the western U.S. Midwest, scattered showers and thunderstorms with amounts of .30-1.50 inches and locally heavier occurred over southern Minnesota, far northern Iowa and eastern Nebraska, DTN Meteorologix Weather said.

 

Dry conditions or lingering light showers are possible in northern areas with scattered showers and thunderstorms of .25-1.00 inch and locally heavier in the south. Mostly dry conditions with some lingering light showers are possible on Thursday in the region before dry weather returns Friday-Sunday. Temperatures are expected near to below normal Wednesday near to above normal Thursday and above normal Friday.

 

In the 6-to-10 day forecast, temperatures are expected mostly above normal with rainfall mostly below normal, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, dry conditions with a few light showers in the north Wednesday. Scattered showers and thunderstorms with amounts of .25-.75 inch with locally heavier amounts are expected on Thursday, with a few lingering showers on Friday, DTN Meteorologix Weather said. Dry weather is expected for the weekend. Temperatures are forecast to be near to below normal north and near to above normal south on Thursday and near to above normal Friday-Tuesday.

 

In the 6-to-10 day forecast, temperatures are predicted mostly above normal and rainfall mostly below normal, DTN Meteorologix Weather noted.

 

On technical charts, the late July low of US$2.51 remains strong technical support in December, though a close below that level would produce chart damage, a market technician said. The next major upside price objective in December is closing prices above US$2.60 3/4, last week's high. First resistance is seen at US$2.59 and then at US$2.60 3/4. First support is noted at US$2.56 and then at US$2.54, Tuesday's low.

 

Cash corn basis bids were mixed Wednesday morning. Central Illinois was unchanged at 13 cents under the September future.

 

In other corn news, China's corn prices were unchanged in the week ended Wednesday as an increasing number of feed companies have begun to replace corn with wheat to produce feed for livestock, an analyst said.

 

Indonesian corn imports are expected to increase in 2006, according to U.S. Grains Council representative A. Ali Basry. Basry said that corn imports are expected to be 800,000 to 1 million metric tonnes in 2006 compared with around 500,000 tonnes in 2005.

 

Corn futures on China's Dalian Commodities exchange ended slightly lower, with May 2007 down RMB/5 at RMB/1,413/tonne.