August 6, 2009

 

CBOT Corn Outlook on Thursday: Down following overnight losses, weather

 

 

Chicago Board of Trade corn futures are expected to open lower Thursday following overnight losses, pressure from soybeans and favorable weather, analysts said.

 

Corn is called 2 cents to 4 cents lower. In overnight trading, September corn was down 2 1/2 cents to US$3.44 1/2 per bushel and December corn was down 3 cents to US$3.54.

 

The market, which had rallied recently on concerns about hot weather in the U.S. corn belt, might remove some of that weather premium over the next couple of days, analysts said.

 

"Any stress here is going to be nullified by the rain," said Brian Hoops, president of Midwest Market Solutions.

 

The DTN Meteorlogix forecast calls for hotter weather, with temperatures above to well above normal Saturday through Monday. But episodes of showers and thunderstorms, particularly in northern and western parts of the U.S. corn belt, are expected. This combination of hot weather and rainfall is favorable to the crop, which is behind schedule and needs more "heat units" to catch up, analysts say.

 

Another analyst said traders will keep an eye on weather for the end of next week, with forecasts showing the potential for a ridge that would keep hot weather in the corn belt.

 

Export sales remain strong, analysts noted. The U.S. Department of Agriculture reported Thursday net sales of 1.152 million metric tonnes for the week ended July 30, down from last week's total of 1.255 million but at the high of trade expectations. Analysts had expected sales between 800,000 and 1.250 million tonnes.

 

Soybeans remain a leader of the market, and are expected to dip on Thursday's open. Outside macro markets, including crude oil and the dollar, pressured corn overnight but do not appear as bearish Thursday morning, analysts added.

 

The corn bulls' next upside price objective is to push December prices above the 40-day moving average at US$3.70 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 Wednesday's high of US$3.70 and then at US$3.76. First support is seen at US$3.53 1/4 and then US$3.49.

 

In international news, Brazil is expected to produce 50.2 million metric tonnes of corn in 2008-09, the National Commodities Supply Corp., or Conab, said Thursday.

 

Total production is forecast to fall 14% from the 2007-08 season, the government agency said. But the estimate is slightly higher than Conab's July estimate of 49.9 million tonnes for 2008-09.