January 11, 2007

 

CBOT Corn Outlook: Up 8-10 cents on e-CBOT gains, short covering

 

 

Chicago Board of Trade corn futures are predicted to begin trading 8-10 cents higher Thursday after stronger prices in the overnight trading session and short covering ahead of Friday's crop production annual reports, sources said.

 

In overnight e-CBOT trading, March corn jumped 10 1/4 cents to US$3.70 1/2 per bushel and May rose 9 cents to US$3.79 1/4. e-CBOT volume in March was 14,718 contracts.

 

Corn was sharply higher overnight and will begin to the upside, a commission house analyst said. Follow through short covering that began in Wednesday's day session and continued overnight and ahead of Friday's U.S. Department of Agriculture reports should supply support, he added.

 

In a Dow Jones Newswire survey, the average corn production estimate of eighteen analysts was 10.706 billion, 39 million lower than the USDA's estimate of 10.745 billion in November.

 

The average corn yield per acre was 150.8 bushels per acre, slightly lower than the 151.2 estimated in November.

 

The average of 15 analysts surveyed pegged corn ending stocks at 893 million bushels, 42 million less than the 935 million estimated in December and far below the 1.971 billion for the 2005-06 crop.

 

March corn has declined sharply since the start of the year and people are covering their positions, a floor trader said. In addition, weekly corn export sales were above analysts' estimates and should also act to underpin prices, he added.

 

The USDA reported that weekly corn export sales for the week ended Jan. 4 totaled 1.518 million metric tonnes, well above the 500,000-700,000 tonnes expected by analysts.

 

On day session open auction technical charts, March corn reached a 2 1/2 month low and then rebounded and closed near the session high. Corn scored a bullish "outside day" up on daily charts on short covering, a technical analyst said.

 

The bulls' next upside price objective is closing prices above technical resistance at US$3.70, while the bears' next near-term downside objective is closing prices below support at US$3.47 1/2, he added.

 

First resistance for March corn is seen at Wednesday's high of US$3.63 1/2 and then at US$3.68. First support is expected at US$3.52 1/2 and then at US$3.50.

 

Cash corn basis bids were mixed Thursday. Central Illinois was unchanged at 4 cents under March.

 

In other corn news, USDA chief economist Keith Collins told the Senate Agricultural Committee Wednesday that an additional one billion bushels of corn is needed this year to supply U.S. ethanol industry, with tighter supplies meaning farmers will have to plant more corn.

 

China's corn exports fell 64% to 3.1 million metric tonnes in 2006, according to preliminary data from the General Administration of Customs. In the January through November period, corn exports fell 67.5% on the year to 2.6 million tonnes. The customs department will release detailed import and export data around Jan. 25.

 

The Seoul branch of Korea Feed Association bought 25,000 metric tonnes of U. corn from Bunge, a Seoul-based trader said Thursday.

 

Corn futures prices on China's Dalian Commodities Exchange settled higher, following the gains set Wednesday at the CBOT, sources said. The most active September contract rose RMB/28 to settle at RMB1,694/tonne.