July 10, 2008


CBOT Corn Outlook on Thursday: Down 4-6 cents as favorable weather continues



Chicago Board of Trade corn futures are expected to open 4 to 6 cents lower Thursday, with good weather and continued liquidation seen in the absence of bullish news, analysts said.


In overnight trading, July corn was down 5 cents to US$6.78 per bushel, September corn was down 5 1/4 cents to US$6.89 1/2 and December corn was down 5 1/2 cents to US$7.07 1/2.


After losses each day this week on an improving crop outlook and pressure from outside markets, analysts said fund liquidation may be slowing down. But there's little reason for the market to climb, traders said.


"I think the funds are still in a selling mode, and the weather looks very good," said Brian Hoops, president of Midwest Market Solutions.


Weather remains bearish, traders and analysts said, with periodic rainfall and a lack of excessive heat seen as boosting the crop.


Although the "big surge" lower may be over, analysts said liquidation could continue as long as the weather remains favorable to the crop, analysts said.


Traders are also expected to consolidate positions ahead of the U.S. Department of Agriculture's supply and demand report, which will be released Friday at 8:30 a.m. EDT. The trade expects more bearish news from that report, with projected 2007-08 corn ending stocks expected on average to climb to 1.514 billion bushels, up from a June estimate of 1.433 billion bushels. Projecting ending stocks for 2008-09 are expected to rise to 820 million bushels, up from the June estimate of 673 million bushels.


The USDA reported net export sales of 644,300 metric tonnes for the week ending July 3, including 337,400 metric tonnes for the 2007-08 marketing year and 306,900 metric tonnes for the 2008-09 marketing year. The report fell in line with analysts' expectations between 350,000 and 750,000 metric tonnes.


In other news, a federal judge in Seattle has issued a temporary restraining order halting USDA plans to release 24 million acres of previously protected land for cattle grazing, according to a media report. Release of the land was seen as potentially bearish for the corn market, as it was expected to reduce feed demand for corn.


Hoops said news of the announcement broke yesterday, and he was surprised the market didn't react to it.


"It should have had some positive effect on corn, but it didn't really do much at all," Hoops said.


The next upside price objective is to push December prices above solid technical resistance at US$7.47, which would fill on the upside a downside price gap on the daily chart, 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$7.02.


First resistance for December corn is seen at Wednesday's high of US$7.25 3/4 and then at US$7.32 1/4. First support is seen at Wednesday's low of US$7.04 3/4 and then at US$7.02.

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