Chicago Board of Trade corn futures are expected to open weaker Friday, following overnight losses on outside markets and an optimistic crop outlook.
Corn is called 10 to 12 cents lower. In overnight trading, September corn was down 11 3/4 cents to US$5.10 1/2, December corn was down 12 cents to US$5.30 and March corn was down 11 3/4 cents to US$5.50 per bushel.
Traders said that while the market was due for a technical bounce Thursday, the gains were probably overdone, setting the stage for the overnight losses. On Friday, trade will consolidate positions ahead of the weekend and the government's crop production report scheduled to be released Tuesday, traders said.
Outside markets, particularly a strengthening dollar and falling crude oil prices, are expected to weigh on corn and other grains, traders said.
Weather remains a bearish weight on the market. The DTN Meteorlogix forecast calls for moderate temperatures and mostly dry conditions through Sunday in the U.S. corn belt, with showers and thunderstorms in far western areas Monday and continuing across the corn belt on Tuesday.
The threat of excessive heat damaging the developing crop appears to have passed, Farm Futures said in its morning commentary. With cooler temperatures expected, traders may begin to have some concern about a lack of growing degree days, and beyond that an early frost, Farm Futures said.
The trade is also looking ahead to Tuesday's crop production report from the U.S. Department of Agriculture. Analysts surveyed by Dow Jones Newswires estimate total production in the report at 11.938 billion bushels, up from the USDA's July projection of 11.715 billion bushels.
Yields are estimated at 152.3 bushels per acre, which would be an increase from the government's July projection of 148.4 bushels per acre.
While the market has likely already priced in a significant climb in production due to the weather, the report could still add pressure to the market because "the trade will immediately discuss whether a big crop is getting bigger," a trader said.
In international news, European Union licenses to import corn rose 212,000 metric tonnes in the week ended Aug. 5, E.U. data showed Friday. The marketing year began July 1, and so far E.U. corn import licenses total 976,000 tonnes, up from 550,000 tonnes for the same time in the 2007-08 campaign.
Also, F.O. Licht raised its 2008-09 world crop forecasts for wheat and corn in its monthly report due to mostly favorable growing weather in the European Union, North America, Australian and parts of the Commonwealth of Independent States.
F.O. Licht now forecasts 2008-09 global corn output at 746.6 million metric tonnes, up 2.5 million from the July projection, but still down sharply from 770.4 million a year ago.
The next upside price objective is to push and close December prices above solid technical resistance at the July low of US$5.62 3/4 per bushel, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid technical support at this week's low of US$5.22 1/4.
