April 10, 2007

 

CBOT Corn Outlook on Tuesday: Weaker start seen after USDA report

 

 

Chicago Board of Trade corn futures are seen starting weaker Tuesday, following a higher-than-expected ending stocks estimate from the government.

 

However, analysts said the influence of the report might be short-lived as traders will likely return to watching the Midwestern weather.

 

Most-active May corn is called to open 2-4 cents a bushel lower.

 

The U.S. Department of Agriculture Tuesday raised its estimate of U.S. ending stocks for corn in its April supply/demand report. Corn carryover was seen at 877 million bushels, above with the 826 million-bushel trade estimate, and above March's figure of 752 million.

 

USDA trimmed the feed usage category for corn by 125 million bushels, to 5.850 billion bushels as livestock operators are feeding less higher-priced corn to animals and are substituting other grain, such as wheat, in animal rations. Other usage categories remain unchanged.

 

The drop in feed was expected, especially after the March grain stocks report showed a slowdown in usage.

 

"The report is bearish, but this is not a major report," said one long-time grain analyst.

 

Analysts said it's likely the market will only be influenced for a short time on the report's finding, leaving traders to look to other influences for price direction.

 

Once the market digests Tuesday's supply and demand data from USDA, the focus for traders will return to Midwestern weather. DTN Meteorologix said widespread showers and thunderstorms are expected across the southern Plains and the lower Mississippi and Ohio river valleys by Friday and Saturday. Meteorologix said the two main weather models, the U.S. and European, disagree in longer-range forecasts. The European model calls for rains in the Plains, Delta and southern Midwest, whereas the U.S. model keeps the rainy weather south of the Midwest.

 

The rainy weather near-term will cause planting delays, the weather firm said.

 

"I think the weather is bullish. We were higher overnight, and I have feeling the market will just shrug off this report. With the forecast suggesting planting delays, it doesn't matter what this report says if we can't get the crop in the ground," the long-time grain analyst said.

 

Corn trade overnight was modestly firmer. May corn rose 1/4 cent a bushel to US$3.63 3/4 a bushel. Late Monday, USDA said 3% of the U.S. corn crop was planted as of April 8, matching the progress of a year ago and slightly below the five-year average of 4%, according to the USDA.

 

In other news, China's corn exports in March totaled 1.13 million tonnes, according to preliminary data provided Tuesday by the General Administration of Customs. China exported 2.9 million tonnes of corn in the first three months, up 32% from a year earlier, it said.

 

China's growing domestic corn demand could cause supplies to dwindle, a senior government official said Monday. The official's comment followed market speculation beginning early last year that China will turn into a net corn importer in a few years on strong growth in domestic demand.