February 21, 2008

 

CBOT Corn Outlook on Thursday: Up 4-6 cents; USDA outlook forecast could weigh

 

 

Chicago Board of Trade corn futures are expected to open 4 to 6 cents higher Thursday, but the release of a 2008-09 acreage estimate from the U.S. Department of Agriculture could limit the upside, analysts said.

 

In overnight electronic trading, May corn gained 3 cents to US$5.36 per bushel and December rose 3 1/4 cents to US$5.51 1/4. Electronic trading volume in May was over 11,000 contracts.

 

Corn should open higher but the release of a 2008-09 planted acreage estimate from the USDA could limit the gains, an analyst said.

 

The USDA estimated 2008-09 planted corn acreage at 90 million acres, down from the 93.6 planted in 2007, but above the USDA's baseline projection of 88 million acres released Feb. 11.

 

The number is slightly bearish compared to the baseline projection but this is just a projection, an analyst said. Farmers can still plant whatever they want so the impact may not be as large as it could be, the analyst said.

 

At the Outlook Forum, USDA Chief economist Joseph Glauber noted that ethanol production will continue to expand while corn production will be lower than last year, with corn prices pushing higher as a result, Glauber said.

 

The USDA estimated 2008-09 wheat plantings at 64.0 million, slightly below the earlier baseline projection and pegged 2008-09 soybean plantings at 71.0 million acres.

 

Market direction might depend on how traders perceive the other acreage numbers, a commission house analyst said. If soybeans rally to the upside, corn will follow as the battle for acreage will continue until planting time, the analyst said.

 

A mixed tone in "outside markets" could limit any upside strength and crude oil is lower, which could limit speculative interest, a trader said.

 

In Argentina, periods of scattered showers and thundershowers are expected through Saturday in some sections of the country's grain growing belt, DTN Meteorlogix Weather said. Temperatures are expected to average near-to-below normal west and near-to-above normal central and east, Meteorlogix Weather said.

 

On daily technical charts, July corn closed higher and another fresh contract high close on gains in "outside markets," a technical analyst said. Market bulls still have solid upside near-term technical momentum with no technical clues that a market top is at hand. The next upside price objective for market bulls remains closing prices above solid resistance at US$5.51 1/4 per bushel, the contract high. The next downside price objective remains pushing prices below solid support at US$5.21 1/2, which would fill on the downside a big upside price gap on the daily bar chart, the analyst said.

 

First resistance for July corn is seen at this week's high of US$5.48 and then at US$5.51 1/4. First support is seen at US$5.37 1/2, and then at US$5.32 1/2.

 

In other corn news, corn futures on China's Dalian Commodity Exchange settled weaker with the September contract down RMB4 at 1,806 RMB/tonne.