August 7, 2007

 

CBOT Corn Outlook on Tuesday: Steady to down 2 cents, choppy trade expected

 

 

Chicago Board of Trade corn futures are expected to begin trading steady to down 2 cents on Tuesday, after the crop progress report revealed U.S. corn conditions were slightly better than expected, and forecasts showed a mixed weather outlook, analysts said.

 

In overnight electronic trading, September corn slipped 1/4 cent to US$3.25 1/2 per bushel, and December edged 3/4 cent lower to US$3.42 1/4. e-CBOT volume in December was 3,422 contracts.

 

Corn should start trading weaker as crop conditions didn't decline as much as anticipated and near-term forecasts increased the chance of rain in the U.S. Midwest, a commission house analyst said. However, the downside could be limited from any spillover strength in wheat futures, as European wheat values were sharply higher overnight, the analyst said.

 

The U.S. Department of Agriculture reported that 56% of the U.S. corn crop was in good-to-excellent condition, down two percentage points from last week but above the 3-to-5 percentage point decline expected by analysts.

 

The market could trade on either side of Monday's settlement prices, a trader said. Although there is rain forecast in the U.S. Midwest, temperatures in the southern sections of the region are predicted to be well above normal. In addition, the crop production and supply/demand reports are due out on Friday, and the market could see some consolidation ahead of it, the trader added.

 

In the western U.S. Midwest, scattered showers and thundershowers are expected to develop in central and northern areas of the region Tuesday night into Wednesday, DTN Meteorologix Weather said. Dry weather with only isolated showers in the north are possible on Thursday. Amounts should average 0.50-1.50 inches and heavier in Nebraska and much of Iowa. Possible totals in southeast South Dakota and southern Minnesota are expected to range from 0.25-1.00 inch. Temperatures are forecast to average above-normal levels with highs in the 80s to low-to-middle 90s Fahrenheit.

 

In the eastern U.S. Midwest, periods of scattered showers and thunderstorms, with amounts between 0.50-2.00 inches and heavier locally, are possible in southern Wisconsin, southern Michigan and northern sections of Illinois, Indiana and Ohio through Thursday, Meteorologix Weather said. Temperatures are expected to average near-to-above normal levels north and above-to-well-above normal levels south during the period.

 

In the six-to-10 day outlook, temperatures are expected to average above-normal levels, possibly well-above normal west, and rainfall is predicted to be near-to-below normal.

 

On daily technical charts, December corn closed nearer the session high Monday after trading moderately lower early on wet weather and forecasts for additional rain, a technical analyst said. The bears still have the technical advantage, and the seven-week downtrend is still in place.

 

The bulls' next upside price objective remains closing prices above solid resistance at US$3.50 per bushel, with the bears' downside price objective closing prices below US$3.24 1/2.

 

First resistance is seen at US$3.46, Friday's high and then at US$3.50. First support is seen at US$3.40, and then at US$3.36.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled lower with the benchmark January contract down RMB/14 at RMB1,543 per metric tonne.