August 14, 2007

 

CBOT Corn Outlook on Tuesday: Steady-down 2 cents on crop progress, weather

 

 

Chicago Board of Trade corn futures are predicted to start day session trading flat-to-down 2 cents Tuesday as a better-than-expected crop conditions report and favorable near-term weather are expected to weigh on prices, analysts said.

 

In overnight electronic trading September corn ended unchanged at US$3.31 per bushel and December fell 3/4 cent to US$3.48 1/4. E-CBOT volume in December was 7,685 contracts.

 

Corn should start out on the defensive, a commission house analyst said. The weekly crop conditions were better than anticipated and that should limit buying interest, the analyst said.

 

The U.S. Department of Agriculture reported that 56% of the U.S. corn crop was in good-to-excellent condition, unchanged from last week and above analyst expectations of a 1-to-3 percentage point decline in conditions.

 

In Iowa, 64% of the crop was rated in good-to-excellent shape, up three percentage points from last week. Conditions in Minnesota, a state that has experienced extremely dry weather for much of the growing season, jumped eight percentage points in the good-to-excellent category.

 

Improving weather conditions are also expected to limit buying interest, a floor trader said. The weather appears to be more favorable for late season crop development and it's raining on LaSalle, which makes it hard to be bullish, the trader said.

 

Still, wheat had good gains overnight and any rally in wheat will likely temper the downside in corn, the trader added.

 

In overnight trade, CBOT September wheat jumped 15 1/2 cents to US$6.82.

 

In the western U.S. Midwest, there is a chance for scattered showers and thundershowers with amounts of 0.10-0.75 inch and locally heavier in the next 24-48 hours, DTN Meteorologix Weather said. Temperatures are expected to average above-to-much-above normal both Tuesday and Wednesday.

 

In the eastern U.S. Midwest there is a chance for scattered thundershowers, with amounts of 0.25-1.00 and locally heavier north and east Wednesday and Thursday, Meteorologix said. Temperatures are expected to average near normal north and above or well above normal south Wednesday and Thursday.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal. Rainfall is expected near-to-above normal west and north and near-to-below normal southeast.

 

On daily technical charts, December corn closed nearer the session low Monday and will have to close prices above solid resistance a US$3.60 to regain upside technical momentum, a technical analyst said.

 

The bulls' next upside price objective is closing prices above solid resistance at last week's high of US$3.60, while the bears' next downside price objective is closing prices below solid support at US$3.36.

 

First resistance for December corn is seen at Monday's high of US$3.55, and then at US$3.58. First support is seen at US$3.48, and then at US$3.45.

 

In other corn news, corn futures on China's Dalian Commodities Exchange settled mostly higher on spillover strength from stronger Chinese soymeal prices. The May contract ended unchanged at RMB1,590 per metric tonne.