March 28, 2007

 

CBOT Corn Outlook on Wednesday: Up 2-3 cents on short covering, higher energy

 

 

Chicago Board of Trade corn futures are forecast to start day session trading 2-to-3 cents higher on short covering ahead of Friday's U.S. Department of Agricultural reports and stronger energy prices based on rising Middle East tensions, a floor analyst said.

 

In overnight electronic trading, May corn rose 2 3/4 cents to US$3.95 1/4 per bushel, July gained 3 cents to US$4.06 3/4 and December finished up 2 1/2 cents at US$4.04. E-CBOT volume in May was 4,128 contracts.

 

Corn should see short covering that began late Tuesday and continued overnight, a floor analyst said. In addition, crude oil futures are stronger on Middle East concerns and corn should derive some support from the higher energy values, he added.

 

The market has been under pressure recently so there should be some position squaring ahead of the reports as some people will want to limit their exposure until after the reports are released, a floor trader said.

 

U.S. corn planted acreage for the 2007-08 marketing year is estimated at 88.061 million acres, according to a survey of 22 analysts conducted by Dow Jones Newswires. This is 9.7 million acres higher than the 78.3 million planted last year and above the 87.0 million acres estimated by the USDA at its Outlook Forum earlier in March.

 

U.S. quarterly corn stocks were estimated at 6.023 billion bushels as of March 1, 2007, according to a survey of 15 analysts conducted by Dow Jones. Stocks as of March 1, 2006, were estimated at 6.987 billion bushels by the USDA.

 

In the western U.S. Midwest light rain or drizzle may linger in northern areas Wednesday with showers and thunderstorms redeveloping on Thursday, DTN Meteorologix Weather said. Temperatures are expected to average above normal.

 

In the eastern sections of the region there is a chance for showers or light rain Wednesday in northern and eastern areas Wednesday with mostly dry weather expected on Thursday, DTN Meteorologix said. Temperatures are forecast to average above normal.

 

On daily open technical charts, CBOT May corn closed nearer the session high Tuesday but remains in the lower boundary of a five-week-old down-trending channel on daily technical charts, a technical analyst said.

 

First resistance is seen at US$3.95 and then at US$4.00, while first support is seen at US$3.87 and then at US$3.85.

 

In other corn news, corn prices in Asia were stable on high international prices in the week ended Wednesday.

 

Corn prices in China were steady in the week ended Wednesday with little buying by processing plants as supplies held by the plants were ample, an analyst said. With supplies adequate, processors are unlikely to resume large purchases before May the analyst added.

 

Corn futures on China's Dalian Commodities Exchange settled modestly higher with the bench mark September contract up RMB/8 at RMB1,686/tonne.