July 19, 2007

 

CBOT Corn Outlook on Thursday: 2-4 cents lower on overnight US Midwest rain

 

 

Chicago Board of Trade corn futures are predicted to start Thursday's day session activity 2 to 4 cents lower after heavier than expected rains fell in a good portion of the U.S. Midwest overnight, analysts said

 

In overnight electronic trading September corn declined 3 1/4 cents to US$3.23 3/4 per bushel, and December fell 3 1/2 cents to US$3.39. E-CBOT volume in December was 7,955 contracts.

 

Corn should open lower mirroring overnight trade after parts of the corn belt received heavier than expected rains, bringing needed moisture to some drier areas, analysts said. The market has already priced in some of the expected rains in recent days, but should react to the more-than-expected moisture received, analysts said. Still, longer term forecasts indicate hotter and drier weather which could limit downward pressure, a trader said.

 

Corn futures are expected to be stuck between lower soybean prices after favorable rains, and higher wheat prices as the wheat market reacts to strong demand, an analyst said.

 

However, the market will also be waiting on midday weather forecasts to determine market direction, analysts said.

 

In the western U.S. Midwest, some showers and thunderstorms are expected in the south with dry conditions in the north through Thursday, DTN Meteorologix Weather said. Conditions will be mainly dry Friday through Sunday with a few showers expected on Monday.

 

Temperatures in the region will average below normal Friday, near-to-below normal west and below normal east on Saturday.

 

In the eastern U.S. Midwest, scattered showers and thunderstorms leaving 0.30-1.50 inches of rain are predicted in southern and some central areas into Thursday evening, with a few light showers in the north, DTN said. Conditions should be mainly dry Friday through Sunday, with light showers occurring Monday.

 

Temperatures in the region will be cooler north, and warm-to-hot south on Thursday, DTN said. Temperatures should be cooler Friday and Saturday and average-to-below normal Sunday.

 

The 6-10 day outlook calls for temperatures to average near-to-above normal with near normal rainfall likely in the far-east and south, and below normal rainfall likely through the northwest.

 

The U.S. Department of Agriculture reported weekly export corn sales were 1,168 million metric tonnes for the week ending July 12, above the 550,000-1.050 million metric tonnes expected. Analysts said sales were supportive but corn will look to soybeans for price direction.

 

On daily technical charts, December corn closed near session highs Wednesday's on short covering after the recent dip to 8 1/2-month lows, a technical analyst said. Little downside price potential is seen as a heat dome is expected in the western corn belt next week, but neither is strong upside potential, the analyst said.

 

The bulls' next upside price objective is closing prices above solid technical resistance at US$3.50. The next downside price objective for the bears is to close prices below solid support at this week's low of US$3.31 1/2.

 

First resistance for December corn is seen at Wednesday's high of US$3.43 and then at US$3.48. First support is seen at US$3.40 and then at Wednesday's low of US$3.35 1/2.

 

In other corn news, corn futures on China's Dalian Commodities Exchange were mixed with the benchmark January contract up RMB7 at RMB1,512 per metric tonne.