July 17, 2008

 

CBOT Corn Outlook on Thursday: Down 5-7 cents; lack of bullish weather news

 

 

Chicago Board of Trade corn futures are expected to open 5 to 7 cents lower Thursday on overnight losses and a lack of bullish news, analysts said.

 

In overnight trading, September corn was down 7 cents to US$6.51 1/2 per bushel, December corn was down 7 1/2 cents to US$6.69 3/4 and March corn was down 5 cents to US$6.90 1/2.

 

Short-covering and weather forecasts that introduced the possibility of hot, dry U.S. corn belt weather helped rally prices Wednesday, traders said. But forecasts remain uncertain, and analysts said the weather isn't yet bullish.

 

"It's going to get hot. It's summer," said John Kleist, broker/analyst with Allendale in McHenry, Ill. "The point of the matter is that so far the weather has been ideal."

 

He said the market was "due for a correction, at what price in time was arbitrary. It just happened to be yesterday."

 

DTN Meteorlogix said the weather will be mostly favorable to corn growth "well into next week." Its forecast calls for showers and thunderstorms in the northern corn belt through Saturday, with other areas mostly dry. Showers and thunderstorms will move across the corn belt Sunday and Monday, according to the forecast.

 

Net export sales were reported at 829,000 metric tonnes combined for the 2007-08 and 2008-09 marketing years for the week ended July 10, up from 644,300 metric tonnes the previous week. Sales were estimated at 450,000 to 850,000 metric tonnes.

 

Old-crop sales were reported at 369,200 metric tonnes and new-crop sales were reported at 460,800 metric tonnes.

 

"Sales were decent, but that's a non-event," a trader said. "We're still trading weather."

 

Outside markets are seen as a minor factor Thursday. Traders noted corn's climb Wednesday came despite a drop in crude oil, which dropped more than US$10 the past two days. Crude was mostly flat Thursday morning.

 

"Corn is starting to play it's own game," Kleist said.

 

After dropping from a close of US$7.77 in the December contract before the Fourth of July holiday weekend, traders said the market is technically weak. End-users have provided underlying support as prices have dropped, traders said.

 

The next upside price objective is to push and close prices above psychological resistance at US$7.00, a technical analyst said. The next downside price objective is to push and close prices below solid technical support at Wednesday's low of US$6.57.

 

First resistance for December corn is seen at Wednesday's high of US$6.79 and then at US$6.91. First support is seen at US$6.70 and then at US$6.61 1/2.