August 3, 2007
CBOT Corn Outlook on Friday: 2-3 cents higher on hot weather, follow through
Chicago Board of Trade corn futures are expected to start Friday's day session 2 to 3 cents higher on follow through from Thursday's gains and hot temperatures predicted in the corn belt this weekend and into next week, analysts said.
In overnight electronic trading, September corn gained 3 cents to US$3.27 per bushel, and December rose 2 1/2 cents to US$3.43 3/4. E-CBOT volume in December was 3,634 contracts.
Futures prices are expected to open higher as overnight weather forecasts continue to call for hot temperatures in the corn belt beginning Saturday, a floor manager said.
Decent rainfall totals are also in the forecast in the northern corn belt this weekend and into early next week, but the market will wait for midday weather reports to see if the rainfall can offset the high temperatures, an analyst said.
"It'll all depend on how much rain we get," the analyst said.
Traders are also expected to await crop production numbers from Informa Economics, to be released at 11:30 a.m. EDT, a trader said. Supportive numbers would confirm the estimates released by FC Stone Wednesday afternoon that came in below the U.S. Department of Agriculture's July supply and demand estimates, traders said.
The USDA estimated corn production at 12.840 billion bushels, and a yield of 150.3 bushels per acre. FC Stone estimated production at 12.644 billion bushels, and a yield of 148 bushels per acre. Friendly numbers from Informa could reinforce ideas of lower than expected production, an analyst said.
Traders are also expected to position themselves in the market before the crop progress report due out Monday. Corn crop conditions have declined in previous weeks, and dry, hot weather in portions of the western corn belt have continued, analysts said.
In the western U.S. Midwest, mostly dry conditions are expected Friday with scattered showers and thunderstorms of 0.25-1.00 inch expected Saturday before mostly dry conditions return on Sunday, DTN Meteorologix said. Episodes of scattered to widely scattered showers and thunderstorms should occur Monday through Wednesday with rainfall totals of 0.30-1.50 inches. Temperatures should be near-to-above normal with highs in the mid-80s to low-90s Fahrenheit.
In the eastern U.S. Midwest, dry conditions are expected Friday, followed by scattered showers and thunderstorms Saturday and Sunday with rainfall totals of 0.25-1.00 inch, DTN Meteorologix said. Monday, scattered showers of 0.10-0.50 inch north, mostly dry conditions Tuesday and episodes of scattered to widely scattered showers and thunderstorms on Wednesday. Temperatures should be above normal with highs in the upper-80s to mid-90s.
The 6-10 day outlook calls for temperatures mostly above normal and rainfall near-to-below normal.
On daily technical charts, December corn closed near mid-range after hitting a fresh three-week high early on Thursday, a technical analyst said. A surprisingly low U.S. corn production estimate issued by FC Stone late Wednesday afternoon boosted the corn market Thursday, as did solid weekly USDA export sales data. Corn Belt weather forecasts calling for better rain chances in the coming days did limit the upside in corn Thursday, the analyst said. Bears still have the near-term technical advantage as a steep six-week-old downtrend is in place from the June high. However, the analyst expects the downside to be limited.
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 Thursday's high of US$3.44 1/2 and then at US$3.50. First support is seen at Thursday's low of US$3.39 and then at US$3.36.
In other corn news, corn futures on China's Dalian Commodities Exchange ended higher with the benchmark January contract up RMB/20 at RMB/1,544 per metric tonne.
