April 9, 2009

 

CBOT Corn Outlook on Thursday: Up 3-5 cents on export sales, cut in carryout

 

 

Chicago Board of Trade corn futures are expected to open 3 cents to 5 cents higher Thursday following a mildly supportive supply and demand report, strong weekly export sales and overnight gains, analysts said.

 

Traders said the supply and demand report from the U.S. Department of Agriculture was friendly. The government projected 2008-2009 ending stocks at 1.700 billion bushels, down from 1.740 billion in March and below analysts' average estimate of 1.731 billion.

 

The cut was due to a 50 million bushel increase in feed usage. Although it was expected by some in the trade, the increase in feed usage was still positive, said Jerry Gidel, analyst for North America Risk Management Services.

 

"They could have sat back and said 'we'll think about it a while,'" Gidel said.

 

As expected, analysts said the report would not be a huge market-mover.

 

"The dynamic is still going to be more the weather issues for corn," Gidel said.

 

The trade is focusing more on weather in the U.S. corn belt, with some concerned about late planting.

 

Corn planting in the Ohio Valley and Midwest will be delayed because of wet, cool weather, according to AccuWeather.com. Planting usually starts in early April in southern Missouri and southern Illinois, moving northward into May.

 

"Conditions in the region will stay cool and wet most of April and then warm up in May," the weather service said. "This will push back the start of planting by at least a week."

 

However, AccuWeather.com expects "favorable summer growing conditions."

 

Weekly export sales were strong again, analysts said. The USDA on Thursday reported weekly net sales of 1.063 million metric tonnes, down 15% from the previous week, but up 7% from the prior four-week average. Trade estimates ranged from 500,000 to 1 million metric tonnes.

 

In other export news, South Korea's Nonghyup Feed Inc. bought 110,000 metric tonnes corn in a tender that concluded late Wednesday, a company official said Thursday.

 

The first shipment of 55,000 tonnes of U.S.-origin corn will be supplied by trading house Cargill at a premium of US$1.25/bushel to the Chicago Board of Trade July contract.

 

The rest of the corn was bought from South America. In overnight trading, May corn was up 3.5 cents to US$4 1/2 per bushel and July corn was up 3.25 cents to US$4.10.

 

On the world balance sheet, the USDA lowered projected world corn production by 700,000 metric tonnes, although it increased production in Brazil by 1 million tonnes.

 

Bulls and bears are on a level near-term technical playing field, a technical analyst said. The next upside price objective is to push and close May prices above solid technical resistance at US$4.18. The next downside price objective for the bears is to push and close prices below solid technical support at last week's low of US$3.76 3/4 a bushel.

 

First resistance for May corn is seen at US$4 and then at US$4.05. First support is seen at US$3.95 and then at Wednesday's low of US$3.90.

 

Prasenjit Bhattacharya contributed to this report.