July 6, 2007

 

CBOT Corn Outlook on Friday: Seen 2-4 cents higher on hotter Midwest weather

 

 

Chicago Board of Trade corn futures are predicted to begin trading 2-to-4 cents higher Friday as hot and dry weather in the western U.S. Midwest is expected to provide support for prices, with additional strength coming from position evening ahead of the weekend and after the recent steep decline in prices, analysts said.

 

In overnight electronic trading, July corn gained 3 cents to US$3.27 per bushel, September rose 3 1/4 cents to US$3.35 3/4 and December gained 2 3/4 cents to US$3.45 1/4. E-CBOT volume in December was 5,264 contracts.

 

The forecast is for hot and dry weather in much of Iowa, Nebraska, and South Dakota over the next several days before turning cooler, but with the crop headed for pollination and forecasts for only light rain in those states, corn should start out higher, a commission house analyst said.

 

In addition, soybeans are expected to open higher and should also provide some support and the corn market could also see some position squaring after the recent sharp decline in prices and ahead of the weekend, a trader said.

 

In the western U.S. Midwest mainly dry weather is forecast Saturday with a chance for a few light showers north to locally moderate showers south on Sunday, and scattered showers and possible thundershowers on Monday, DTN Meteorologix Weather said. Temperatures are expected to average above normal early in the period and near normal later.

 

In the eastern U.S. Midwest, mainly dry weather is expected Saturday with dry weather or only a few light showers forecast for Sunday with a chance for a few thundershowers Monday, Meteorologix Weather said. Temperatures are forecast to average above normal in the period.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal west and near-to-below normal east. Rainfall is predicted near-to-above normal south and east and near-to-below normal northwest.

 

On daily technical charts, December corn settled near mid-range on light short-covering in a bear-market, and mixed weather forecasts, a technical analyst said. Very serious technical damage has occurred to strongly suggest that a market top is in place, but the corn market is overdone to the downside with the crop headed into its key stage of pollination. However, it will take another weather market scare to drive prices back into a renewed uptrend, the analyst added.

 

Weekly export sales were released by the U.S. Department of Agriculture and were 1.954 million metric tonnenes, well above the 750,000-1.050 million tonnenes forecast by analysts. Included in the total were sales of 886,000 tonnenes for delivery in 2007-08. It's amazing what an 8-month low (price) can do for demand, an analyst said.

 

The bulls' next upside price objective remains closing prices above solid resistance at US$3.50 per bushel, with the bears' next downside price objective closing prices below this week's low of US$3.36.

 

First resistance is seen at US$3.45 1/2, and then at US$3.50. First support is pegged at US$3.39 1/2, and then at US$3.36.

 

Deliveries posted against the Chicago Board of Trade July corn future were 954 contracts Friday. Large issuers included the customer account of Man Financial which issued 323 contracts, the customer account of RJ O'Brien, which issued 191 contracts and the customer account of Fortis, which issued 158 contracts. Large stoppers included the customer account of Man Financial, which stopped 133 contracts, the customer account of Man Professional Clearing, which stopped 121 contracts and the customer account of Fortis, which stopped 123 contracts. The last trade assigned was July 5.

 

In other corn news, South Korea passed on a tender for 275,000 metric tonnenes of corn.

 

Corn futures on China's Dalian Commodities Exchange settled mixed with the benchmark January contract up RMB/1 at RMB1,540 per metric tonne.