CBOT corn outlook: Up on export demand, weather threats
Post Date: 09 Jul 2011 Viewed: 504
U.S. corn futures are expected to start higher Friday on sales of the grain to China and concerns about threatening weather reducing output.
Traders predict corn for December delivery, the most actively traded contract, will start up 3 cents to 5 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 4 1/2 cents, or 0.7%, to $6.20 a bushel.
Demand continues to support prices following a string of sales to China and "unknown destinations" during the past week. The unknown buyers are suspected to be China, as well, as the nation is thought to have increased its purchases since prices have tumbled from record high in early June.
U.S. corn export sales, issued Friday, totaled 1.5 million tons in the week ended June 23, up 60% from the previous week, according to federal data. Sales of 621,800 tons for delivery in the current marketing year, which ends Aug. 31, were up 45% from the prior four-week average.
"There apparently are buyers of corn in the export market at current levels," said Doug Bergman, broker for MF Global in Chicago.
Traders are keeping a close eye on export sales as strong global demand for corn drove the nearby contract to its all-time high of nearly $8 a bushel last month. Prices have since pulled back almost 18%.
Traders are watching weather forecasts closely, as well. Favorable conditions are needed to grow a large crop to meet demand for the grain.
The corn crop needs good weather in July in particular, because it goes through a critical stage of development called pollination. Yet, it appears abnormal heat may hit the Midwest from July 15 to July 18, bringing temperatures of 95 degrees or higher to several locations, according to meteorologists at Freese-Notis Weather, a private forecaster.
"A good part of the 2011 U.S. corn crop is going to be pollinating when that heat is present, so its timing really could not be much worse," they said.
Still, the corn market could be pressured by falling crude oil prices, traders said. Oil is linked to corn because ethanol is made from the grain.
In other news, traders are waiting for private analytical firm Informa Economics to issue crop data around 11:30 a.m. EDT. The estimates are being released ahead of U.S. Department of Agriculture crop reports due out Tuesday.