August 22, 2008

 

CBOT Corn Outlook on Friday: 4-6 cents lower as dollar strengthens

 

 

U.S. corn futures are expected to open 4-6 cents a bushel lower on profit-taking from the recent highs, with a strong dollar, weak crude oil and precious metals prices leading the way, analysts said Friday.

 

In overnight trade, September corn was 6 1/2 cents lower at US$5.91 1/4 and December fell 5 1/2 cents to US$6.12 a bushel.

 

"The dominant issue right now is what is the influence of the outside markets, which are influenced heavily by what the dollar is going to do," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

The other main factor is trying to determine the size of the corn crop, which is dependent on the weather. The U.S. weather model is keeping precipitation from Tropical Storm Fay away from the Midwest, while the European model suggests rains will move into exceedingly dry areas of Ohio, Roose said.

 

While scattered showers are currently making their way across areas of central and southern Illinois, northwestern Indiana and into parts of Michigan, dryness continues to be a concern for filling corn in the Midwest, brokers said.

 

Showers on Thursday and Friday will help the situation, but many areas of the Midwest will miss out. The outlook for next week suggests some chance of rain but if Tropical Storm Fay continues to "tie up" moisture the rain chances might have to be reduced, private forecaster DTN Meteorlogix said.

 

A few light showers with locally heavier rains are possible in eastern and southern areas of the western belt Friday, with some lingering showers possible on Saturday. The western belt is expected to be dry Monday and Tuesday, with scattered light to moderate showers Tuesday night into Wednesday.

 

In the eastern belt, scattered showers are possible Friday and Saturday, brining 0.10-0.60 inch of rain, particularly from southern and eastern Illinois eastward. Mostly dry conditions are forecast for Monday and Tuesday, though there is a slight chance for showers in the Ohio River Valley, Meteorlogix said.

 

At 10 a.m. EDT, the Pro Farmer advisory service will issue its national corn and soybean yield estimates, which will incorporate findings from the just-completed 2008 Pro Farmer Midwest Crop Tour.

 

The tour found an Iowa corn yield estimate of 168.3 bushels an acre, down from last year's tour projection of 167.7 bushels. The USDA projects a yield of 171 bushels per acre.

 

The western leg of the tour found an average Minnesota corn yield of 178.35 bushels, up from the 2007 tour average of 169.07 bushels and also up from the USDA's estimate of 165.00 bushels an acre.

 

In other markets, October crude oil is US$2.18 lower at US$119.00 a barrel and December gold is down US$10.10 at US$828.90 an ounce.

 

The U.S. dollar is firmer against the euro and the Japanese yen.