May 9, 2007

 

CBOT Corn Outlook on Wednesday: 2-3 cents higher on corrective bounce

 

 

Chicago Board of Trade corn futures are expected to begin trading 2 to 3 cents higher Wednesday on ideas recent sharp losses were overdone and due for a correction, a commission house analyst said.

 

In overnight electronic trading, May corn gained 2 cents to US$3.55 3/4 per bushel, July rose 2 3/4 cents to US$3.66 1/4 and December gained 2 cents to US$3.68 1/2. E-CBOT volume in July was 4,430 contracts.

 

Corn has sold off sharply over the last several sessions and is due for a bounce, the commission house analyst said.

 

July corn has declined more than 30 cents from its high set last Thursday.

 

In addition, the market should see some squaring of positions ahead of Friday's U.S. Department of Agriculture reports, a floor trader said.

 

In a Dow Jones Newswires survey, the average of 15 analysts pegged 2006-07 corn ending stocks at 878 million bushels, almost unchanged from the 877 million estimated by the USDA in April.

 

The average of 14 analyst's surveyed estimate 2007-08 ending stocks at 1.058 billion bushels.

 

In the western U.S. Midwest, mainly dry weather is expected through Friday with temperatures averaging above normal, DTN Meteorologix Weather said.

 

In the eastern U.S. Midwest, mainly dry weather is expected Thursday and Friday, with temperatures averaging above normal.

 

In the 6- to 10-day outlook, temperatures are expected to average near-to-above normal west and near-to-below normal east, with rainfall near-to-above normal west and near-to-below east, Meteorologix Weather said.

 

On daily technical charts, July gapped open lower and closed nearer the session low, with prices closing at a fresh five-week low, a technical analyst said. Some near-term chart damage was inflicted Tuesday as it appears that the majority of the U.S. corn crop will be planted on time, the analyst added. The bears' next downside objective is closing prices below solid support at US$3.55 1/2.

 

First resistance for July is seen at US$3.67 3/4, then at US$3.70. First support is seen at US$3.62 1/2 and then at US$3.61.

 

Deliveries posted against the May future were 2,168 contracts. Large issuers included the customer account of Cunningham, which issued 745 contracts and the customer account of Man Professional Clearing, which issued 401 contracts. Large stoppers included the customer account of RJ O'Brien, which stopped 449 contracts, and the house account of ADM Investor Services, which stopped 276 contracts. The last trade assigned was May 8.

 

In other corn news, the Korea Corn Processing Industry Association or Kocopia purchased 55,000 metric tonnes of optional-origin corn in a tender concluded Wednesday, an association official said.

 

Corn futures on China's Dalian Commodities Exchange settled higher with the benchmark September contract up RMB11 at RMB1,673 per metric tonne.