August 2, 2007

 

CBOT Corn Outlook on Thursday: 5-6 cents higher; export sales, FC stone estimates

 

 

Chicago Board of Trade corn futures are expected to start Thursday's day session 5-6 cents higher after better than expected weekly export sales and a yield and production estimate from a commission house that was below the U.S. Department of Agriculture's forecast, analysts said.

 

In overnight electronic trading, September corn gained 6 cents to US$3.25 per bushel, and December rose 5 3/4 cent to US$3.41 3/4. E-CBOT volume in December was 7,139 contracts.

 

FC Stone's yield and production estimates should support prices with an estimate of a 148 bushels per acre yield and production of 12.644 billion bushels, analysts said.

 

In July's supply and demand report, the USDA estimated a 150.3 bushels per acre yield and production of 12.840 billion bushels.

 

Stronger than anticipated weekly export sales might also add support, a commission house analyst said.

 

U.S. weekly corn export sales totaled 1.776 million metric tonnes for the week ended July 26, the U.S. Department of Agriculture reported Thursday, well above the 700,000 to 1.150 million tonnes expected by analysts. Included in the total were sales of 970,200 tonnes for delivery in the 2007-08 marketing year.

 

However, weather forecasts for the U.S. Midwest continue to predict significant rainfalls in dry areas starting this weekend and into next week, which should put a cap on price gains, a trader said. Forecasts are also calling for above normal temperatures in the corn belt next week, which makes those forecasted rains even more important, the trader said.

 

Traders will look to the midday weather forecasts to see if any heat or moisture levels are changed in next week's outlook, analyst said.

 

In the western U.S. Midwest, mostly dry weather conditions are expected through Friday, with scattered showers and thunderstorms of 0.25-0.75 inch of rainfall Saturday and lingering showers Sunday night, DTN Meteorologix said. Scattered showers and thunderstorms of 0.25-1.00 inch are expected Monday and Tuesday. Temperatures will average near-to-above normal with highs in the mid-80s to low-90s, but near-to-below normal Saturday.

 

In the eastern U.S. Midwest, dry conditions will occur through Friday, with scattered showers and thunderstorms during the weekend, with rainfall totals of 0.25-0.75 inch, DTN Meteorologix said. Dry conditions with a few light showers are forecast Monday and Tuesday. Temperatures should average above-normal with highs in the upper-80s to mid-90s, but near-to-above normal during the weekend.

 

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 closed nearer the session low Wednesday. Corn Belt weather forecasts calling for better precipitation chances in the coming days were negative for corn, a technical analyst said. Bears have the technical advantage as a steep six-week-old downtrend is in place from the June high.

 

In December, 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.

 

First resistance for December corn is seen at US$3.40 and then at Wednesday's high of US$3.44 1/4. First support is seen at Wednesday's low of US$3.33 and then at US$3.30.

 

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