August 23, 2007

 

CBOT Corn Outlook on Thursday: Up 3-5 cents, crop concerns, technical strength

 

 

Corn futures on the Chicago Board of Trade are seen starting Thursday's day session on firm footing, continuing its upward trend on crop concerns and technical buying.

 

Analysts expect corn to open 3 to 5 cents higher.

 

In overnight electronic trading, September corn was 5 1/2 cents higher at US$3.53, and December corn was 5 1/2 cents higher at US$3.69 3/4.

 

Lingering worries over potential crop losses associated with upper Midwest flooding is serving as the fundamental spark for the higher tone, analysts said.

 

Technical strength is seen as a supportive feature as well, with the ability of December corn to push above major moving average resistance Wednesday and an absence of bearish news keeping traders targeting near term upside objectives, analysts said.

 

Meanwhile, spillover support from wheat is expected to lend support to prices as well, traders added.

 

A technical analyst said the bulls Wednesday gained fresh upside technical momentum. The bulls' next upside price objective is to close December futures above solid resistance at Wednesday's high of US$3.65. Wednesday's high is also a 38.2% Fibonacci retracement level of the move from the June high to the July low. The next downside price objective for December corn is to close prices below solid support at US$3.50.

 

First resistance for December corn is seen at Wednesday's high of US$3.65 and then at US$3.70. First support is seen at US$3.60 and then at Wednesday's low of US$3.57 3/4.

 

The U.S. Department of Agriculture reported weekly corn export sales were 1,108,800 metric tonnes for the week ended August 16. Included in the total were sales of 969,600 metric tonnes for the 2007-08 marketing year. The 2007-08 sales were primarily for Japan with 309,900 metric tonnes, Iran with 240,000 tonnes and Mexico with 126,900 tonnes. Analysts had forecast sales between 600,000 and 1,150,000 metric tonnes.

 

USDA also announced Thursday private export sales of 113,792 metric tonnes of corn for delivery to Japan in the 2007-08 marketing year.

 

Crop scouts on the western leg of the John Deere/Pro Farmer U.S Midwest crop tour said western Iowa's corn yields were seen as widely variable in the three cropping districts surveyed in the state.

 

On the eastern leg of the tour, Illinois corn yields are expected to be up 7.4% from last year. The average yield for the state of Illinois was 160.35 bushels per acre, up 7.4% from one year ago. This compares to the USDA's Aug. 1 projection for a 9% yield increase to 178 bushels.

 

The DTN Meteorlogix Weather Service forecast said additional heavy storms may bring more flooding concerns to the western and northern Midwest Thursday into Friday. Meanwhile, hot and dry weather continues over the southeast Midwest until a cold front arrives Saturday. Long range charts suggest a chance for scattered showers in this area during the middle of next week.

 

In overseas markets, corn futures traded on the Dalian Commodity Exchange settled slightly higher. The benchmark May 2008 contract settled RMB5 higher at RMB1,590/tonne.