Thursday, June 2, 2011
CBOT corn outlook: Flat as traders view crop problems, demand
CHICAGO (Dow Jones)--U.S. corn futures are expected to open flat Thursday as ongoing weather troubles are balanced by worries of weaker demand.
In overnight trade, corn for July delivery at the Chicago Board of Trade was down 3/4 cent to $7.57 3/4 per bushel. December corn, which reflects supplies from this year's crop, was up 1/2 cent to $6.80.
Prices were initially weak in overnight actions as traders took profits following strong gains Wednesday. But the market recovered later in the session as a weaker dollar helped boost commodities generally.
The main focus for traders remains the weather. From drought in the southern U.S. to saturated soils in Ohio and North Dakota, "everywhere you look, there are weather problems," said Dave Marshall, an independent broker in Nashville, Ill.
"It's certainly not conducive to the idea that we need to grow record-size crops in order to meet the growing demand," Marshall said.
Supplies are already historically tight, with some grain end-users worried about where they will source supplies this summer before the new crop rolls in.
Corn's strength Wednesday came despite a stronger dollar and sharply lower equities amid worries about the economy. An economic slowdown, along with the high price of corn, could hurt demand, according to analysts.
Analysts noted that chicken producers are showing signs of cutting back, as a weekly U.S. Department of Agriculture report Wednesday showed eggs set in incubators fell 2%, the third consecutive decline.
Weather in the eastern corn belt could also limit the market's upside Thursday, analysts said. The Meteorlogix weather forecast calls for mostly dry weather through Monday. Still, "there remains some question as to whether all of the intended corn acreage will be planted across Indiana and Ohio," the forecaster noted.
Traders are assessing a wide variety of views on how many acres will be planted to corn. The Linn Group on Wednesday forecast planting would be 5 million acres below the USDA's most recent estimate due to the soggy weather.
Other market participants disagree. The chief executive for Bunge Ltd. (BG), a major grain trader and processor, said there were "pockets" of problems but that a very large grain and oilseed harvest was still likely this year.
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