January 9, 2008

 

CBOT Corn Outlook on Wednesday: Up 2-3 cents on spillover buying, firm e-CBOT

 

 

Chicago Board of Trade corn futures are predicted to start day session trading 2-to-3 cents higher Wednesday on spillover buying from Tuesday's strong gains and higher prices in overnight activity, analysts said.

 

In overnight electronic trading, March corn gained 2 3/4 cents to US$4.81 1/2 per bushel, and set a new life-of-contract and a 12-year high of US$4.82.

 

Corn could see a two-sided session after the recent rally as some people even up their positions, but market participants are expecting the U.S. Department of Agriculture's crop production and stocks reports to be supportive, which could limit the downside, a commission house analyst said.

 

The average production estimate for the 2007-08 U.S. corn crop was 13.109 billion bushels, according to a survey of 19 analysts by Dow Jones Newswires, 59 million bushels below the 13.168 billion estimated by the USDA in November. The average yield estimate for the 2007-08 crop was 152.3 bushels per acre, according to 15 analysts surveyed, compared to the 153.0 bushels estimated in November.

 

The average 2007-08 corn ending stocks estimate is 1.698 billion bushels, according to a survey of 17 analysts, down from the 1.797 billion bushels estimated in December. The average quarterly corn stocks estimate as of Dec. 1 is 10.550 billion bushels, in a survey of 13 analysts. Stocks as of Dec. 1 2006 totaled 8.933 billion bushels.

 

The USDA is scheduled to release an updated report Friday at 0830 EST (1330 GMT).

 

There could be some consolidation before the reports and the outside markets which have been rallying along with corn, have turned weaker, a trader said. Argentina received rain overnight and some forecasters have increased the chance of rain for the near term, the trader said.

 

Scattered showers and thunderstorms with amounts of 0.30-1.50 inches with locally heavier amounts are possible on Thursday, said DTN Meteorlogix Weather. Dry weather is expected Friday through Monday, with raining possibly returning to grain growing regions by the middle of next week. Temperatures are forecast near-to-below normal Thursday and Friday and near-to-above normal Saturday.

 

On daily technical charts, March corn prices Tuesday gapped open higher and hit a fresh contract and 12-year highs. The market had a bullish upside "breakout" from the recent trading range on the daily bar chart but it is still due for a corrective pullback soon, a technical analyst said. Corn bulls are still in technical control and there are no strong near-term technical clues that a market top is close at hand, the analyst said. The next upside price objective continues to be to push and close prices above solid resistance at US$5.00 per bushel. The next downside objective is to push prices below solid support at US$4.68 1/4 to fill on the downside Tuesday's upside price gap on the daily bar chart.

 

First resistance for March corn is seen at US$4.79 3/4, the contract high set Tuesday and then at US$4.85. First support is seen at US$4.75, and then at US$4.71.

 

In other corn news, China's National Grain and Oils Information Center kept its forecast for corn production at 148 million metric tonnes, unchanged from its previous estimate. The USDA forecast 2007-08 Chinese corn production at 145 million tonnes in December.

 

Corn futures on China's Dalian Commodities Exchange settled little changed with the benchmark Sept. contract down RMB/1 at 1,836RMB/tonne.