January 12, 2006

  

CBOT Corn Outlook on Thursday: Seen opening 3-5 cents lower on USDA reports

 

 

Corn futures at the Chicago Board of Trade are expected to open 3-5 cents lower Thursday after the U.S. Department of Agriculture released its crop production, grain stocks and supply/demand data, traders said.

 

In overnight e-CBOT trading, March corn fell 1 3/4 cents to US$2.12 3/4 per bushel, May corn slipped 2 cents to US$2.22, and July corn also fell 2 cents to US$2.30 1/4.

 

There's not anything friendly in this report this morning, said Brian Hoops, President of Midwest Marketing in Yankton, S.D. U.S. corn ending stocks are up, and the world corn ending stocks are higher as well. "The supply numbers are clearly bearish for corn and soybeans and well above the average trade guess."

 

The USDA reported 2005 corn production at 11.112 billion bushels, up 80 million from its last estimate in November, and above the average analyst's estimate of 11.068 billion bushels.

 

Corn ending stocks were pegged at 2.426 billion bushels, up 5 million bushels from December but above the average analyst estimate of 2.389 billion bushels.

 

Quarterly grain stocks also came in above analyst's expectations. The USDA estimated corn stocks as of Dec. 1 at 9.813 billion bushels, well above the average guess of 9.775 billion and last year's 9.451 billion bushels.

 

"Unless the weather in South America reduces world supply, we're in a bearish supply driven market for the next several months," Hoops said.

 

On the supply/demand balance sheet, the USDA raised domestic feed and residual usage by 125 million bushels, but reduced its estimate of corn exports by 50 million bushels to 1.850 billion. The USDA left unchanged corn for ethanol production at 1.575 billion bushels.

 

The USDA also released the weekly export sales report for the week ended Jan. 05. Weekly corn exports were 631,200 metric tonnes and within the range expected by analysts.

 

Scattered showers and thundershowers occurred overnight in Argentina with additional moisture expected over the next several days, DTN Meteorlogix weather said. Increasing rainfall and cooler temperatures through the weekend will ease stress to developing corn crops with more rain likely during the second half of next week further improving crop conditions, Meteorlogix noted.

 

Cash corn basis bids were unchanged to mostly higher Thursday morning. Central Illinois was unchanged at 3 cents over the March, with St. Louis was 1 cent higher at 5 cents over the March.

 

In technical trading, prices closed Wednesday near their session highs with bulls regaining some near term technical momentum, a market analyst said. First resistance for March corn is seen at US$2.15 and then at US$2.17. First support is pegged at Wednesday's low of US$2.12 1/2, and then at US$2.09 3/4, this week's low.

 

In other corn news, Taiwan Sugar Corp. is seeking 20,000 metric tonnes of U.S. origin corn in a tender to be concluded Tuesday, a Taipei-based trader said.

 

Hungary's corn crop production totaled just over 9 million metric tonnes, up 8.2% over the 8.33 million metric tonnes produced in 2004, the Central Statistics Office said Thursday.

 

Corn futures traded on China's Dalian Futures Exchange settled at lower levels Thursday, with the most active September contract down RMB12, ending at RMB1,372/tonne.