September 24, 2009

 

CBOT Corn Outlook on Thursday: Seen 3-5 cents down on lack of weather worry

 

 

The lack of a near-term U.S. weather threat is expected to open the door for losses in Chicago Board of Trade corn futures at the start of Thursday's day session, traders said.

 

CBOT corn is called to start down 3 to 5 cents per bushel. In overnight electronic trading, December corn lost 4 1/2 cents to US$3.25 3/4.

 

Corn closed higher Wednesday after a slight change toward frost in the midday weather forecast led to a short covering rally, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. Today, it looks as though forecasts for frost are "only going to be true for the northernmost parts of the corn belt and should have little impact on the crop overall," he said.

 

Private weather firm DTN Meteorlogix agreed there was no frost threat early next week. Traders said there was talk about the potential for frost late next week, although that is too far off for a reliable forecast.

 

"Cool or very cool weather early next week is not expected to be damaging," Meteorlogix said. "Crops will continue to progress under a near to above normal temperature pattern outside of the Monday/Tuesday time frame."

 

Traders are already looking ahead to the U.S. Department of Agriculture's October crop reports, which will reveal whether the government has raised its yield estimate. There is a "strong tendency" for the USDA to increase the yield in the October if they increase it in the August and September reports and for the final yield to be higher yet, Pfitzenmaier said.

 

"If you consider that the crop condition rating is one of the highest ever for this time of year, the likelihood of the USDA increasing yield some more is not a hard to imagine," he said. "This morning, the dollar is a little stronger and the crude oil weaker again, so we are expecting those markets to weigh on the corn price."

 

In other news, weekly U.S. corn export sales of 673,300 tonnes were within analyst expectations of 550,000 to 1 million tonnes. Sales were primarily for Mexico, which took 450,100 tonnes, according to the USDA.

 

Wednesday's gains "begin to suggest that a market bottom or harvest low is in place" for corn, a technical analyst said. Prices have been hit recently by expectations for a big crop.

 

The bulls' next upside price objective is to push CBOT December corn above solid technical resistance at last week's high of US$3.47 3/4, the technical analyst said. The next downside price objective for the bears is to push and close the contract below major psychological support at US$3.00, he said.

 

First resistance for December corn is seen at Wednesday's high of US$3.37 and then at US$3.40, the analyst said. First support is seen at US$3.25 and then at Wednesday's low of US$3.19, he said.