March 9, 2007

 

CBOT Corn Outlook on Friday: Up 1-2 cents, follows e-CBOT, neutral USDA report

 

 

Chicago Board of Trade corn futures are seen starting Friday's day session higher, following the overnight theme amid the absence of any surprises in the U.S. Department of Agriculture's supply and demand report.

 

Analysts expect corn to open 1 to 2 cents higher.

 

In overnight electronic trading, March corn ended 1 1/2-cent higher at US$4.13 1/2, May corn finished 2 1/4 cents higher at US$4.23 3/4, and December corn was 1-cent higher at US$4.11 3/4.

 

CBOT markets are expected to follow overnight trends as traders said the supply and demand report was a non-event, with most of the data falling inline with pre report estimates. The markets are seen moving pass the report fairly quickly, analysts said.

 

The USDA estimated U.S. corn ending stocks at 752 million bushels, unchanged from the February estimate and modestly below the average analyst estimate of 763 million bushels. The USDA left all domestic balance sheet line items unchanged from February.

 

On the world scene global corn stocks were cut to 87.79 million metric tonnes, down from 87.95 million in February. USDA raised Argentine corn production by 500,000 metric tonnes to 21.5 million, and raised Brazil's production 2 million tonnes to 48 million. The production is expected to be a record in both countries as excellent growing season weather is reflected in higher yields, USDA reported.

 

South Africa's corn crop was trimmed 2.5 million metric tonnes to 7 million, as drought and heat during February sharply reduced production prospects, USDA said.

 

The lack of changes in the U.S. balance does reaffirm the longer term bullish underlying theme in the market, but without fresh fundamental support for market bulls to digest, any sign of price weakness could uncover mild selling interest, traders said. However, after a recent price correction futures are poised to return to a trading range biding time until a clear picture of planting intentions are available, traders added.

 

A technical analyst said market bulls are still somewhat on the defensive and still need to work to fill a downside price gap on the daily bar chart that was created on Feb. 27 basis May futures. It will take a price move above US$4.38 to fill that downside price gap and repair recent near-term chart damage. The next downside price objective is producing a close below solid chart support at this week's low of 4.13.

 

First resistance for March corn is seen at US$4.25 and then at US$4.30. First support is seen at US$4.19 and then at US$4.15.

 

In deliveries, a total of 363 notices were placed against the CBOT March corn future. The last trade date assigned was March 7. Issuers and stoppers were scattered among various commission houses.

 

In other news, the local shortfall in Philippine corn production is estimated to reach up to 1.8 million metric tonnes despite a projected record harvest this year, which could lead to a sharp increase in yellow grain imports by the livestock, poultry and feedmilling sectors, a senior feedmilling industry said.

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower on fresh short positions. The benchmark September 2007 contract fell RMB8 to settle at RMB1,689/tonne.