August 21, 2008


CBOT Corn Outlook on Thursday: Called 3-4 cents higher on commodity strength



U.S. corn futures are expected to open 3-4 cents a bushel higher on follow-through buying, a weak U.S. dollar and a rally in the key inflationary markets, analysts said Thursday.


In overnight trade, September corn was 4 cents higher US$5.79 1/4 and December was up 4 cents at US$5.99 a bushel.


Stout early gains in crude oil and precious metals, encouraged by dollar weakness, are expected to entice speculative-fund buying throughout the Chicago Board of Trade grain and soybean markets. Soybeans are called 9-12 cents higher and wheat is expected to open 4-6 cents higher, traders said.


"A broad-based rally in commodities should help futures open higher this morning, though more erratic trade could be seen in low volume markets," said Bryce Knorr, senior editor at Farm Futures.


"Weather is again in the mix, with midday forecasts providing another chance for volatility," he said.


Corn futures are expected to find continued underlying support on weather concerns. While some rain is forecast Thursday and Friday for parts of the Midwest, it may not be enough for the crop.


Showers in parts of Illinois and Wisconsin will help, but many other dry areas may not get much-needed precipitation. Light rain is expected through northeastern Missouri and eastern Iowa Thursday, with a chance for a few light showers on Friday, private forecaster DTN Meteorlogix said.


Corn export sales for the week to Aug. 14 totaled 691,500 metric tonnes, below the range of 850,000 to 1.4 million tonnes the trade had anticipated. A total of 494,900 tonnes were sold for the 2008-09 crop year, while 196,600 were sold for 2007-08, the U.S. Department of Agriculture said.


Corn shipments for the week totaled 1,090,500 tonnes, a 16% gain from the previous week and up 15% from the prior four-week average. Japan took the most corn at 303,300 tonnes, with South Korea second at 211,800 and Mexico at 198,600 tonnes.


The Korea Feed Association is buying limited corn supplies due to high prices on the CBOT. Last week, the KFA canceled a tender for 220,000 tonnes of corn for December shipment because of the high prices. The KFA is one of South Korea's largest corn and feed wheat-buying organizations.


The 2008 Pro Farmer Midwest Crop Tour found good yield potential in western Iowa corn, pegging the crop at an average yield of 171.7 bushels an acres in the western crop districts, an average of 7.2% higher than what the tour found last year.


The eastern leg of the tour found lower average yields in Illinois, however, pegging the state's crop at 166.94 bushels an acre, down from 176.65 bushels the tour found last year. The USDA projects the Illinois yield at 172 bushels an acre.


Crops generally improved as the tour moved west from Ohio, but scouts did notice deteriorating conditions as they neared the Illinois/Iowa border.


In other markets, October crude oil is US$4 higher at US$119.56 a barrel and December gold is up US$18.20 at US$834.50 an ounce.


The dollar is weak against the euro and the Japanese yen.

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