May 19, 2008

 

CBOT Corn Outlook on Monday: Down 4-6 cents on dry weather

 

 

Chicago Board of Trade corn futures are expected to open 4 to 6 cents lower Monday on dry U.S. corn belt weather and expected good planting progress, traders said.

 

In overnight trading, July corn was down 3 3/4 cents to US$5.87 1/4 per bushel, September corn was down 4 cents to US$5.99 1/4 and December corn was down 4 3/4 cents to US$6.12.

 

Dry weekend weather and the likelihood that farmers will continue to plant aggressively are keys to the market right now, traders said.

 

"I think that's the driving force in the grains markets," a trader said. "The weather right now is wide open."

 

Analysts are estimating the U.S. Department of Agriculture's crop progress report, set for release Monday afternoon, will show corn plantings between 73% and 77% complete.

 

Don Roose, president of U.S. Commodities in Des Moines, Iowa, said the report should show good planting progress in the western corn belt this weekend. He expects emergence to be about 10 percentage points below average. That would mean the crop is about nine days behind.

 

"That's a big deal, because it has a direct effect on yields," Roose said.

 

Although dry weather has been good for planting, Roose noted that it's also been cold, which limits emergence.

 

The DTN Meteorlogix weather forecast calls for a few showers in the central and eastern corn belt through Monday night, with totals no more than 0.25 inch. From Wednesday through Friday, north and northwest parts of the Midwest will see showers and thunderstorms, while the south and southwest areas will be dry.

 

Roose added that strong outside markets, including crude oil and gold, could have a "neutralizing" effect on bearish weather forecasts.

 

Corn dropped last week on bearish weather forecasts, and on Friday July corn closed below its 50-day moving average for the first time since March 24. A trader said that close could lead to "continued liquidation" on Monday. But he added he expects corn prices to continue on a sideways path this week.

 

The next upside price objective is to push and close July corn prices above solid technical resistance at US$6.00, according to a technical analyst. The next downside price objective is to push and close prices below solid support at US$5.83.

 

First resistance for July corn is seen at US$5.95 and then at US$6.00, the analyst said. First support is seen at Friday's low of US$5.88 and then at US$5.83.

 

The analyst said there is very strong technical support located at US$5.83, which is the bottom of the recent sideways trading range at higher price levels.