August 16, 2007

 

CBOT Corn Outlook on Thursday: Down 4-5 cents on equity declines, weak outside markets

 

 

Chicago Board of Trade corn futures are predicted to begin trading 4-to-5 cents lower Thursday as weakness in overseas equity markets and lower values in outside markets including energy and metals are expected to pressure prices at the opening of day session trading, analysts said.

 

In overnight electronic trading September corn declined 5 1/2 cents to US$3.22 1/2 per bushel and December also fell 5 1/2 cents to US$3.39 3/4. E-CBOT volume in December was 6,790 contracts.

 

Corn should open lower following the losses in outside markets and weaker overseas equity markets, an analyst said. Gold, silver, palm oil and energies were all lower overnight as the weakness in world stock markets led to liquidation in commodities, the analyst said.

 

Improving weather across the U.S. Midwest with rainfall and more seasonal temperatures expected over the next several days should also limit buying interest, as this will help with the late season grain-filling stage in corn, a floor trader said.

 

In the western U.S. Midwest, dry conditions are expected early Friday before thunderstorms develop with amounts of 0.25-1.00 inch and locally heavier continue through Saturday, DTN Meteorlogix Weather said. Temperatures are expected to average near-to-below normal north and near-to-above-normal south in the period.

 

In the eastern U.S. Midwest there is a chance for isolated showers and possible thundershowers Friday and scattered thunderstorms, with amounts of 0.25-1.00 inch and locally heavier through northern areas on Saturday, Meteorlogix said. Temperatures are expected to average near normal north and well above normal south during this time.

 

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

 

Better-than-expected weekly corn export sales were a supportive factor but could be ignored given the outside market weakness, a commission house analyst said.

 

The U.S. Department of Agriculture reported that corn export sales for the week ended Aug. 9 totaled 1.490 million metric tonnes. Included in this total were sales of 1.702 million tonnes for delivery in 2007-08 which was partially offset by cancellations of 212,000 tonnes in the 2006-07 crop year.

 

In addition, the USDA announced a sale of 240,000 metric tonnes of corn to Iran for delivery in the 2007-08 marketing year.

 

On daily technical charts, December corn closed mid-range Wednesday as a lack of bullish news has limited the upside, a technical analyst said. Technically the bulls are fading and need to close prices above the August high of US$3.60 to regain solid technical momentum, while the bears' downside price objective is closing prices below US$3.36, the analyst said.

 

First resistance for December corn is seen at US$3.51 and then at US$3.55, this week's high. First support is seen at US$3.41 1/2, and then at US$3.40.

 

In other corn news, higher 2007-08 European Union corn import demand and a 12% decline in E.U. production will be bullish for world prices, analytical firm Strategie Grains said Thursday. The firm forecasts the 2007-08 E.U. corn crop at 46.8 million metric tonnes.

 

Corn futures on China's Dalian Commodities Exchange settled lower with the May contract down RMB/26 at RMB1,566 per metric tonne.