January 11, 2006

 

CBOT Corn Outlook on Wednesday: Steady, waiting on USDA reports

  

 

Corn futures at the Chicago Board of Trade are expected to begin trading Wednesday flat to 1 cent higher as the market looks ahead to Thursday's U.S. Department of Agriculture reports for market direction, sources said.

 

In overnight e-CBOT trading, March corn gained 1/4 cent to US$2.13 1/2 per bushel, May corn rose 1/2 cent to US$2.23, and July corn finished up 1/4 cent to US$2.30 3/4 per bushel.

 

Corn closed strong Tuesday on fund buying, but the market should start steady with the USDA reports out Thursday, a floor analyst said. However, if the funds decide to return to the market, they could support it once more, he added.

 

The market is anticipating a bearish report, it rained overnight in Argentina and more rain is expected this weekend, so it could be hard to rally the market, a commission house broker said. But the impact of the index funds can not be overlooked, he added.

 

In Tuesday's session, corn prices firmed late as fund buying, thought to be from commodity index funds, boosted futures.

 

The U.S. Department of Agriculture is scheduled to release the final crop production estimate for the 2005 growing season along with quarterly grain stocks and supply/demand figures at 7:30 a.m. CST (1330 GMT) Thursday.

 

The average of estimates from 17 analysts surveyed by Dow Jones Newswires project 2005-06 corn output at 11.068 billion bushels, with a yield of 148.9 bushels per acre, the second-biggest crop on record.

 

In November, USDA projected U.S. corn production at 11.032 billion bushels with a yield of 148.4 bushels.

 

The average of 12 analysts surveyed by Dow Jones Newswires forecast quarterly grain stocks as of Dec. 1 at 9.775 billion bushels as compared to 9.451 billion as of Dec. 1 2004.

 

Scattered showers and thundershowers occurred over the past 24 hours In Argentina, DTN Meteorlogix weather said. In addition, a frontal boundary will become nearly stationary during the next several days with tropical moisture flowing from the north, which will allow for a significant rainfall event for the corn growing areas in the country over the next several days, Meteorlogix said.

 

Cash corn basis bids were unchanged Wednesday morning. Central Illinois was unchanged at 3 cents over the March, with St. Louis also unchanged at 4 cents over the March.

 

In technical trading, March corn filled Monday's downside gap Tuesday. Market technicians peg first resistance for March corn at US$2.14 and then at US$2.15. First support is pegged at US$2.12 and then at US$2.09 3/4, this week's low.

 

In other corn news, Taiwan's Great Wall Enterprise, bought 60,000 metric tonnes of U.S. corn from Cargill, a Great Wall official said Wednesday.

 

Cash corn prices in China were slightly higher in the week ended Wednesday, supported by strong demand from state-owned firms who want to stockpile corn before the Lunar New Year, sources said.

 

Corn futures traded on China's Dalian Futures Exchange ended slightly lower Wednesday, with the most active September contract down RMB1, ending at RMB1,384/tonne.