June 25, 2008

 

CBOT Corn Outlook on Wednesday: Up 2-4 cents on weather concerns

 

 

Chicago Board of Trade corn futures are expected to open 2-4 cents higher Wednesday on overnight gains from weather concerns, analysts said.

 

In overnight trading, July corn was up 4 1/2 cents to US$7.17 per bushel, September corn was up 3 cents to US$7.30 and December corn was up 3 3/4 cents to US$7.51.

 

After several days of dry weather, the re-emergence of rainy weather in the U.S. corn belt is prompting more concern about the crop. Parts of northern Missouri saw heavy rain overnight, and more rain is forecast across the corn belt through the end of the week.

 

"That may cool off some of the selling pressure," said John Kleist, broker/analyst with Allendale in McHenry, Ill. "Also, we did not take out Monday's low, and technically with the report coming out this Monday, the market may turn into choppy, consolidative-type trade."

 

The U.S. Department of Agriculture will issue a much-anticipated acreage report June 30. The report is expected to give an indication of how much damage the crop sustained due to flooding this month, although analysts say a clear picture won't emerge until the USDA issues another report in August.

 

The corn belt will see scattered to widely scattered showers and storms Wednesday and Thursday, particularly in the afternoon and evening, according to DTN Meteorlogix. Totals will be between 0.10 and 0.50 inches, with locally heavier amounts both days. The forecast calls for more showers and thunderstorms Friday and Saturday, with locally heavy amounts.

 

The market will likely continue to see choppy trading, which has characterized the market so far this week, a trader said. Another trader said a rebound is likely because the market has experienced "a pretty big slide" this week.

 

Analysts say the market has dropped due to upside exhaustion and signs of slipping demand in the wake of new record highs. But further crop problems could prompt another rally, they said.

 

"With the break in prices, the market is reacting to demand uncertainties, but supply uncertainties are under the surface," Kleist said.

 

The next upside price objective is to push and close December prices above technical resistance at Tuesday's high of US$7.64 1/4, a technical analyst said. The next downside price objective for the bears is to push and close prices below solid support at this week's low of US$7.38.

 

First resistance for December corn is seen at US$7.51 1/2 and then at US$7.60. First support is seen at Tuesday's low of US$7.43 3/4 and then at US$7.38.