August 5, 2009

 

CBOT Corn Outlook on Wednesday: Up 1-3 cents; weather eyed, soy supports

 

 

Chicago Board of Trade corn futures are poised to open higher Wednesday following overnight gains amid support from soybeans and uncertainty about the weather.

 

Corn is called 1 to 3 cents higher. In overnight trade, September corn was up 3 1/2 cents to US$3.58 per bushel and December corn was up 3 1/4 cents to US$3.69.

 

The market is in a consolidative mode, traders and analysts say, and could remain so headed into the government's August 12 crop production report. But weather remains a wildcard, with the hotter weather settling in the Midwest prompting some concern about crop damage.

 

But DTN Meteorlogix said that "Hot weather late this week and over the weekend is not expected to last long enough to put much stress on crops." The forecast calls for episodes of scattered showers and thunderstorms through Friday and again early next week in the Midwest.

 

Shawn McCambridge, senior grains analyst for Prudential Bache, said that if the forecast holds up, "you couldn't ask for better conditions." The crop is behind schedule and could use some heat to foster more growth, analysts said.

 

The danger, McCambridge said, is that while the heat arrives, rain totals are lower than currently forecast.

 

"I can't really term this a weather threat. But it's the closest thing we've had to one this year so far," McCambridge said.

 

Outside macro markets are "non-committal," McCambridge said. Analysts say corn is following soybeans, which are also poised to open higher Wednesday.

 

The next upside price objective is to push prices above the 40-day moving average at US$3.72 3/4, a technical analyst said. The next downside price objective for the bears is to push and close prices below US$3.53 1/4, the July 6 high and the top of the trading range that confined price action for most of the month of July.

 

First resistance for December corn is seen at Monday's high of US$3.76 and then at US$3.90. First support is seen at US$3.60 1/2 and then US$3.39.

 

In international markets, corn prices in China's major producing areas were mostly stable in the week to Wednesday, supported by the government's regular sales. Prices in Harbin in major producer Heilongjiang province were between RMB1,550-RMB1,610 a metric tonne, stable from a week ago.

 

In export news, South Korea's Nonghyup Feed Inc. bought 110,000 metric tonnes of corn from Glencore for January and February shipment in a tender concluded late Tuesday, a trader with the company said.

 

The first cargo was purchased at US$1.8650 over Chicago Board of Trade's December contract, which settled Tuesday at US$3.65/bushel, while the second was purchased at US$1.8850 over the same contract, he said.